Bulls n Bears Daily Market Commentary : 26 January 2023

Fri Jan 27 07:20:12 CAT 2023

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Bulls n Bears Daily Market Commentary : 26 January 2023

 <mailto:info at bulls.co.zw> 

ZSE commentary

Heavy and midcap counters lift the market.

The market rebounded in Thursday session on the backdrop of gains in mid and
heavy cap counters. The All-Share Index advanced 1.35% to 22111.38pts while,
the Top Ten Index added 1.73% to 13673.25pts. The ZSE Agriculture Index
improved 1.84% to 90.98% while, the Mid Cap Index rose 0.40% to 44418.55pts.
Agriculture concern Ariston surged 12.45% to $4.7804 while, SeedCo Limited
enhanced 11.00% to end at $150.0000.Proplastics improved 10.04% to $44.0152
while, tea company Tanganda jumped 7.50% to

$145.1750. Conglomerate Innscor put on 6.75% to close the day at $725.3657.
Financial services group Getbucks led the shakers of the day on a 8.26%
decline to $20.0000 followed by Zimplow that shed 6.66% to $20.0019. Brick
manufacturers Willdale slipped 3.24% to $3.0900 as Meikles trimmed 2.97% to
$160.1073. Clothing retailer Edgars slid 2.37% to $9.6000.

The market closed with a positive breadth as gainers outweighed fallers by a
count of four. Volume of shares traded swelled 96.34% to 9.68m while,
turnover garnered 73.45% to $1.18bn. Volume leaders of the day were OKZIM,
Zimplow and Delta that claimed 40.71%, 20.70% and 14.88% apiece. Value
drivers of the day were Delta (49.14%), Innscor (16.28%), OKZIM (12.67%) and
Econet (10.28%). Simbisa was the only active counter on the VFEX as it let
go 0.02% to trade at USD$0.4799. The ETFs recorded losses in the session
with Datvest ETF emerging the worst faller after retreating 0.88% to $1.5000
trailed by Old Mutual ETF that lost 0.77% to $7.4099. Morgan and Co MIZ
tripped 0.71% to $1.3000 as Morgan and Co MCS remained stable at $24.5000. A
total of 306,140 units worth $516,593.54 exchanged hands in four ETFs. The
Tigere REIT dipped 4.38% to $48.3454 on 12,419 units..-efesecurities

Global Currencies & Equity Markets

South Africa

South African rand weakens after c.bank's 25 bps rate hike

(Reuters) - South Africa's rand weakened on Thursday after the central bank
raised its main lending rate(ZAREPO=ECI) by 25 basis points to 7.25%, less
than expected by most economists polled by Reuters.

At 1522 GMT, the rand traded at 17.1600 against the dollar, 0.31% weaker
than its previous close.

The South African Reserve Bank (SARB) played it cautiously with the latest
rate hike, suggesting it is nearing the end of a tightening cycle that
started in November 2021, analysts said.

A Reuters poll published last week showed that 11 of 20 economists expected
the central bank to hike rates by 50 basis points (bps) to 7.50%. Eight
projected an increase of 25 bps and one economist forecast no change.

"The decision to scale back on the pace of tightening comes against the
backdrop of slowing growth. That said, we expect one final 25bps rate hike
in March, after which the SARB is expected to leave rates on hold until the
second half of the year," said ETM Analytics in a research note.

The central bank now forecasts the economy will grow 0.3% in 2023 and 0.7%
in 2024, a worse prediction than at its last MPC meeting in November, amid a
backdrop of worsening power cuts.

It sees consumer inflation of 5.4% in 2023 and 4.8% in 2024, it said on
Thursday.

In the equities market, the Johannesburg All Share index (.JALSH) climbed
0.98% to 80,508 points, while the Top-40 index (.JTOPI) rose by 1.04% to
74,479 points.

Stocks were buoyed by market heavyweight technology investment companies
Prosus NV (PRX.AS), and its South African parent Naspers (NPNJn.J) after
they said late on Wednesday that they are cutting up to 30% of jobs at their
corporate offices.

Johannesburg-listed shares of Prosus closed 2.99% firmer at 1,450 rand,
while Naspers jumped 3.60% to 3,500 rand.

Finishing the day as the second biggest gainer, Truworths (TRUJ.J) rose by
4.17% to 66.22 rand after the fashion retailer forecast half-year profit
growth of up to 11%, a sign that consumers were still shopping despite
inflationary and high interest rates pressures.

Truworths' forecast and sales update pulled other peers up, with fashion and
food retailer Woolworths (WHLJ.J) rising 2.17%, budget clothing and
furniture retailer Mr Price (MRPJ.J) up 3.01% and clothing retailer TFG
(TFGJ.J) up 1.10%.

The government's benchmark 2030 bond was almost unchanged, with the yield at
9.630%.

- The Thomson Reuters Trust Principles.

AFRICA-FX-Kenyan shilling, Zambian kwacha, Nigerian naira still under
pressure

(Reuters) - Kenya's shilling, Zambia's kwacha and Nigeria's naira are
expected to remain under pressure against the dollar in the week to next
Thursday, while Ghana's cedi and the Tanzanian shilling will hold steady.

KENYA

Kenya's shilling KES= is expected to weaken this week due to increased
demand for dollars from importers, particularly oil companies.

Commercial banks quoted the shilling at 124.30/50 per dollar, compared with
last Thursday's close of 123.95/124.15.

"We are seeing an uptick in (dollar) demand coming from across all
importers, but mainly the oil guys, and we should see it remain under some
pressure," a trader at one commercial bank said.

Thursday's level of 124.30/50 is a new all-time low, according to Refinitiv
data.

ZAMBIA

Zambia's kwacha ZMW= is likely to remain under pressure against the dollar
next week as high demand has lowered hard currency supplies.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 19.1100 per dollar, down from 18.6800 at the close of
business a week ago.

"The Kwacha is expected to trade in the range of 19.000 to 19.500 in the
short to medium term under current market conditions," Access Bank ACCESS.GH
said in a note on Thursday.

Zambia's President Hakainde Hichilema said on Monday that the country's
creditors should quickly agree on the content of a debt restructuring plan
to avoid distorting recovery efforts.

NIGERIA

Nigeria's naira NGNP= is set to continue depreciating on the parallel market
in the coming week, as dollar demand outstrips supply and the central bank
maintains its policy of rationing foreign currency, traders said.

The naira was quoted at 753 to the dollar on the parallel market on
Thursday, compared with 751 at last Thursday's close. It traded within a
range of 460 to 462 on the official market NGN=.

"With FX demand outweighing dollar supply, we expect the naira to continue
depreciating gradually in the coming weeks," foreign exchange trading firm
AZA Finance said in a note.

GHANA

Ghana's cedi GHS= is expected to remain stable in the coming week but could
be offset if the government does not secure higher participation in its
domestic debt exchange program, analysts said.

Refinitiv data showed the cedi trading at 12.00 to the dollar on Thursday,
the same as last Thursday's close.

Ghana needs around 80% of bondholders to sign up for its domestic debt
exchange (DDE) program, which has faced resistance. The deadline for
registration has been extended to Jan. 31.

"Cedi remains stable ahead of the debt exchange deadline... amid matched
demand and supply. The direction of the local currency next week will
largely depend on the success of the DDE," said Chris Nettey, a trader at
Stanbic Bank.

TANZANIA

Tanzania's shilling TZS= is expected to hold steady next week as inflows
from tourism and month-end obligations cushion the demand for dollars across
most sectors.

Commercial banks quoted the shilling at 2,332/2,342 against dollar on
Thursday, unchanged from last week's close.

"We do not expect major changes to the shilling next week... we expect some
inflows from tourism and end-month obligations helping a bit to offset the
demand from nearly all sectors, including energy and manufacturing," a FX
trader from a commercial bank in Dar es Salaam said.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar hits reverse gear as Fed cedes rate-rise 'driver's seat'

The US dollar has wilted against its peers in the opening month of 2023 as
the Federal Reserve fades as the key driver in currency markets and
investors focus on the policies of other major central banks.

The Fed's campaign of big rate rises captivated investors in the first nine
months of 2022, igniting a rush into the dollar. But as the US central bank
has slowed its increases in borrowing costs, the currency has slid against
its peers.

The dollar has fallen 1.4 per cent in January against half a dozen major
currencies, leaving it on track to record its fourth-straight monthly
decline. It is now trading at levels last seen in May 2022.

"The Fed is no longer in the driver's seat - and you see that playing out
across the foreign exchange space," said Mazen Issa, senior foreign exchange
strategist at TD Securities. Once the Fed had signalled it would end its
pace of 0.75 percentage point increases in December, "the Fed effectively
decided to cede policy leadership to its global peers".

Central banks elsewhere have picked up the mantle, most notably the European
Central Bank and the Bank of Japan. The ECB is expected to stick with
extra-large rate rises while the Fed downshifts. For the BoJ, raising
interest rates may still be some way off, but December's relaxation of its
policy of pinning long-term bond yields near zero has fanned speculation
that the era of ultra-loose monetary policy in Japan is drawing to a close.

That more hawkish outlook has helped bolster both the yen and the euro,
which have returned to their strongest levels since the spring of 2022.
Monetary policy decisions next week from the Fed, ECB and Bank of England
could provide further clues on whether the Fed will surrender its leadership
position this year.

"2022 was the year where everything aligned for the dollar. The Fed was
leading the charge with interest rates, and the war in Ukraine and
zero-Covid policies in China amounted to favourable terms-of-trade shocks.
All these things have unwound at the same time," said Alan Ruskin, chief
international strategist at Deutsche Bank.

High costs for raw materials like natural gas and oil made 2022 hard for
economies that depend heavily on commodity imports like Europe, the UK and
Japan. Their ratios of import prices to export prices - known as the "terms
of trade" - were dismal, showing ever more capital leaving those markets,
weakening their exchange rates. But this year's winter has been warm and
that trend didn't progress as far as had been expected, keeping demand for
natural gas in check.

"The terms-of-trade story has turned very much in favour of Europe, UK,
Japan - commodity-importing countries. They now have much better prospects
than they did before," said Shahab Jalinoos, global head of foreign exchange
strategy at Credit Suisse.

Lower commodity prices have also shifted expectations for growth outside the
US. Deutsche Bank on Tuesday revised its forecast for European growth
upwards, from expectations for a 0.5 per cent contraction to a 0.5 per cent
expansion in 2023. "Gas storage is up and gas prices are down. Inflation is
falling and uncertainty is declining. As such, we can remove the recession
from our 2023 forecast, adjust headline inflation lower and pare back the
deficit," said Deutsche Bank economist Mark Wall.

Conditions are also improving in China, where the government has abandoned
its zero-Covid policy, a move expected to bolster its economy after last
year saw one of its weakest performances on record. The effects of the
reopening on the currency market are likely to be mixed, however, as
stronger growth may also push demand for commodities higher, driving global
inflation up.

The greenback's central place in global finance meant that when it rose last
year, it placed pressure on economies around the world, particularly
developing markets which often pay for imports in dollars and borrow in the
currency. Its reversal this year has helped to stoke a turnround, with an
MSCI basket of developing market currencies up 2.4 per cent in 2023.

"The dollar doom loop that markets were so worried about last year has
turned into the dollar boom loop," said Karl Schamotta, chief market
strategist at Corpay..

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold little changed ahead of U.S. inflation data

(Reuters) - Gold prices were little changed on Friday as traders awaited
U.S. inflation data, due later in the day, to gauge the Federal Reserve's
stance on further interest rate hikes.

Spot gold was flat at $1,927.99 per ounce as of 0234 GMT, while U.S. gold
futures were off 0.1% at $1,928.30.

Investors are now awaiting U.S. personal consumption expenditures (PCE)
data, the Fed's preferred inflation measure, at 1330 GMT for cues on the
central bank's path forward.

Traders are in wait-and-see mode, said IG Market strategist Yeap Jun Rong,
adding that a downside surprise in inflation may point towards a
less-hawkish Fed, which could drive longer-term upward moves in gold prices.

On Thursday, bullion prices fell 1% after data showed the U.S. economy grew
at a faster pace in the December quarter than economists had expected,
prompting bets that the Fed to keep interest rates higher for longer.

However, this could have been the last quarter of solid growth before the
impact of the Fed's aggressive tightening spree starts reflecting, with most
economists expecting a mild recession by the second half of 2023.

The GDP data points to a resilient U.S. economy but there were some signs of
challenges to the economy, which kindled some hopes of a less aggressive
Fed, Yeap said.

Investors broadly expect the Fed to scale back rate hikes to 25 basis points
(bps) at its Jan. 31-Feb. 1 meeting, from 50 bps in December.

Lower interest rates tend to be beneficial for bullion as it lowers the
opportunity cost of holding the non-yielding asset.

Spot silver fell 0.2% to $23.86 per ounce.

Platinum lost 0.4% to $1,013.88, and palladium also slipped 0.4% to
$1,670.87. Both the metals were headed for a third straight week of
declines.

-The Thomson Reuters Trust Principles.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

National Unity Day

December 22

Christmas Day

December 25

Boxing Day

December 26

Counters trading under cautionary

CBZH

Meikles

Fidelity

TSL

FMHL

Turnall

GBH

ZBFH

GetBucks

Zeco

Lafarge

Zimre

Invest Wisely!

Bulls n Bears 

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DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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