Bulls n Bears Daily Market Commentary : 14 July 2023

[Bulls n Bears]

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Bulls n Bears Daily Market Commentary : 14 July 2023

 

 	

 

 

 	

 <https://www.cloverleaf.co.zw/> 
ZSE commentary

 

 

Zimbabwe Stock Exchange (ZSE)

 

The overall Market Cap closed the week with a drop of 14.58% to close at ZWL10.56 trillion. Total turnover also trimmed 44.19% to close at ZWL1.41 billion, with the total volumes traded shedding 24.63% to close at ZWL1.80 million. For today the three most traded counters were Delta, Masimba Holdings and Econet, with a contribution of 90% to the total turnover. 

 

 

The benchmark All-Share Index lost 0.42% to close with 131,829.50 points at the back of 7 raisers and 12 decliners. The Top 15 Index gained 0.08% to 86,179.88 points with the Top 10 Index also increasing by 0.09% to close with 63,158.87 points.

 

Masimba Holdings and Delta topped the movers list for the day after adding 6.26% and 3.68% to close at $910.41 and $2,032.49.  Rainbow Tourism Group and Ok Zimbabwe capped the risers' list after advancing by 0.31% and 0.24% to close at $115.00 and $192.88,respectively.

 

Trading on top of the decliners' list for the day was Nmbz Holdings and First M. Limited after each lost 14.98% and 14.93% to close at $175.70 and $225.00, respectively. Zimbabwe Newspapers and Hippo Valley lost 13.60% and 10.90% to close at $10.07 and $2,300.00, respectively.  Star Africa Corporation capped the list after dropping 7.33% to close at $6.01.

 

Victoria Falls Stock Exchange (VFEX) 

 

The VFEX All Share Index lost 0.17% to close with 73.43 points. Simbisa Brands Ltd was the most traded counter on the VFEX Exchange, contributing 85.84% of the total turnover.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity Markets

 

Nigeria

 

FX illiquidity persists as naira exchange rate falls to N803/$1

Despite recent reforms taken the Bola Tinubu administration, investigations by Daily Sun can reveal that manufacturers and businesses are still unable to access forex at the official market.

 

Consequently, naira exchange rate to the Dollar fell to N803.90/$1 at the Investors’ and Exporters’ (I&E) window last week.

 

The supply constraint is said to be piling pressure on the price and Nigerian students hoping to study overseas are now faced with uncertainties ahead of school fees season from September 2023.

 

The figure reported, is the lowest ever the exchange rate has fallen to since Nigeria adopted the managed float exchange rate system and the first time the rate has closed above N800/$1.

 

 

The closing rate of N803/$1 represents a 7.3 per cent decline from the start of the week when it closed at N744/$1. The first signal of a challenge was when the exchange rate closed at N776/$1.

 

Further investigations reveal that there was a similar decrease recorded at the parallel market as Naira fell to N822/$1.

 

Meanwhile, Nigeria’s FX reserves decreased by $2.01 million week-on-week (w/w) to $34.06 billion.

 

Reacting to the development, economic analysts said they expect the re-introduction of the “willing buyer, willing seller” model at the I&E window to influence the exchange rate direction.

 

“Nonetheless, while the CBN’s abolishment of its multiple FX windows is positive in boosting foreign investors’ confidence, we think they will adopt a wait-and-see approach, for now, looking for signals on the CBN’s plans to start clearing the FX backlogs and boosting FX supply to support the market in the near term”, analysts at Cordros Research said.

 

For his part, Head of Research at FSL Securities, Victor Chiazor, said that banks appear to be fueling the demand owing to the increase in the amount of FX that can be spent on dollar cards abroad.

 

 

“Let us not forget that we are still facing a money supply problem of between N55 trillion or N57 trillion. This might be the cause of the soaring demand of FX especially as the new administration has swung into action. We expect to see the FX demand solved but it will take time because a lot of backlogs still exist.

 

That said, the country was not fully prepared for the consequences when the FX windows were collapsed into one segment”, Chiazor said.

 

It will be recalled that the new government had insisted on the unification of the exchange rate amid calls from local and foreign businesses to end the multiple exchange rates.

 

Bowing to pressure, the Central Bank of Nigeria (CBN) abolished the nation’s multiple FX window and collapsed all the official FX segment into the I&E window.

 

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South Africa

 

Rand retreats on prolonged power cuts, bets for SARB pause

The South African rand weakened on Friday, bringing this week's rally to a halt as prolonged power blackouts and expectations that the central bank will leave its main interest rate on hold next week weighed on the investor mood.

 

The risk-sensitive rand has been a big beneficiary of data this week showing cooling U.S. inflation, which has stoked speculation the Federal Reserve could pause its interest rate hikes after this month and driven the dollar to its weakest since April 2022.

 

The rand broke below 18 to the dollar for the first time in three months on Thursday and as of Friday's open was up more than 5% for the week.

 

But by 1045 GMT, the rand had moved back above 18 to the dollar and was trading down about 0.7% from its Thursday closing level at 18.05.

 

Rand Swiss portfolio manager Gary Booysen said the fact the South African Reserve Bank (SARB) was likely to leave its repo rate unchanged at next week's monetary policy meeting could prompt investors to sell the rand in advance, given the Fed was expected to hike once more in a decision due on July 26.

 

"There is another risk factor that poses a threat to the South African rand - the return of level 6 load shedding. Historically, there has been a correlation between power cuts and a weakening rand," Booysen added.

 

South Africa's struggling utility Eskom said on Thursday that it would extend 'Stage 6' power cuts, its highest level on record, into the weekend as cold weather drives up demand and power station breakdowns constrain supply.

 

Stage 6 outages mean many businesses and households are in the dark for 10 hours or more per day.

 

On the Johannesburg Stock Exchange, the blue-chip Top-40 index last traded about 0.4% stronger. The benchmark 2030 government bond was weaker, with the yield up 4.5 basis points to 10.430%.

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

Dollar gains after steep losses, but downtrend stays intact

The U.S. dollar bounced on Friday after falling sharply the last few days, as investors consolidated losses ahead of the weekend, but its trajectory remained tilted to the downside with the Federal Reserve thought near the end of its rate hike cycle amid softening inflation.

 

It was still on track for its biggest weekly decline since November against a basket of six major currencies.

 

The dollar index edged up 0.%2 to 99.923, after touching a 15-month low of 99.574 earlier. The index was down 2.3% for the week.

 

The weekly decline was exacerbated by June U.S. producer and consumer inflation data that showed easing price pressures.

 

U.S. producer prices barely rose last month and the annual increase was the smallest in nearly three years, data showed on Thursday, a day after a report indicated that consumer prices gained modestly last month.

 

“The U.S. dollar’s recovery today appears to be mostly a correction,” said Helen Given, FX trader, at Monex USA in Washington.

 

“Markets may have overreacted a bit to Wednesday’s CPI numbers. The speech yesterday from Fed’s Waller reinforced that the Fed is still looking to hike twice, even if markets don’t fully believe it.”

 

Governor Christopher Waller said he was not ready to call an all-clear on U.S. inflation, as he favored more rate rises this year.

 

Markets are still pricing in a 95% chance of a 25 basis point hike from the Fed this month, CME’s FedWatch tool showed, but no more for the rest of the year.

 

Investors have been betting on a turn lower in the dollar for months, with short positions more than doubling over the month to July 7, according to data from Commodity Futures Trading Commission, although they remain far off the levels in 2021.

 

Against a weakening dollar, the euro touched a 16-month peak of $1.1245 in Asian hours before flattening at $1.1229.

 

Versus the Swiss franc, the dollar gained 0.4% to 0.8621 francs, rising from an eight-year low of 0.8568. The dollar was on pace for its largest weekly percentage loss versus the franc since December last year.

 

The dollar rose 0.5% to 138.805 yen , but was on course for its worst week since January.

 

“In the near term, we may see a slight bit of dollar strength, but it remains to be seen on July 26 (date of Fed meeting) if the Fed can convince traders it will hike twice more and not just once,” said Monex’s Given.

 

The Swedish crown fell 0.5% against the greenback to 10.2395 per dollar, moving away from a two-month high hit on Thursday, on data showing consumer inflation is decelerating at a slower pace than expected. The Swedish currency is still set for its biggest weekly gain since March 2009, up 5.2%.

 

Elsewhere, the Australian dollar eased 0.8% to US$0.6837 after Michele Bullock was appointed head of Australia’s central bank on Friday, becoming its first female governor as it undertakes a sweeping reorganisation.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets



 

Gold dips after post-CPI rally, copper hit by weak China GDP

Investing.com-- Gold prices retreated from one-month highs on Monday, as traders locked in some profits after two weeks of gains, while copper prices fell tracking weak economic growth data from major importer China.

 

Metal prices saw strong gains over the past two weeks as the dollar slumped to 15-month lows, tracking a string of weak U.S. inflation readings. The weak data also spurred increasing bets that the Federal Reserve was close to ending its rate hike cycle for the year.

 

But gains in gold were also somewhat limited by signs of resilience in the U.S. economy, which in turn weighed on safe haven demand for the yellow metal. Prices have largely stalled after reaching the $1,960 an ounce level last week.

 

Spot gold fell 0.2% to $1,951.51 an ounce, while gold futures fell 0.5% to $1,955.45 an ounce by 22:33 ET (02:33 GMT). The two instruments surged 1.6% over the past week. 

 

Copper stalls as China Q2 GDP underwhelms

Among industrial metals, copper prices reversed some recent gains after data showed that economic growth in China, the world's largest copper importer, slowed substantially in the second quarter.

 

Copper futures slid 0.7% to $3.9068 a pound, after rallying nearly 4% in the past week. 

 

China's second-quarter gross domestic product (GDP) barely grew from the first quarter, while also growing less than expected from the same period last year, government data showed on Monday.

 

The country’s real estate sector- which is a key source of copper demand- is still struggling with weak sales and laggard activity, while manufacturing activity remained in contraction over the past three months.This spurred concerns over copper demand remaining steady this year, amid slowing growth in China.

 

Among other readings, Chinese industrial production grew slightly more than expected in June, while retail sales growth slowed substantially.

 

Still, trade data released last week showed that Chinese copper imports remained robust in June, although this was also attributed in part to manufacturers building inventory on weak spot copper prices.

 

Metal markets keep Fed meeting in sight 

The Federal Reserve is widely expected to hike interest rates during a late-July meeting. But markets are now anticipating an extended pause in the Fed’s rate hike cycle, given the soft inflation readings from last week.

 

Still, with core U.S. inflation remaining high, markets remained unsure over whether the central bank will signal a pause. Fed officials have also offered mixed cues on future rate hikes.

 

The prospect of rising interest rates bodes poorly for metal markets, given that it increases the opportunity cost of holding non-yielding assets. But recent declines in the dollar have greatly benefited metal prices. 

 

 


 

INVESTORS DIARY 2023

 


Company

Event

Venue

Date & Time

 

 	

 

 

 

 

 

 	

 

 

 

 

 

 	

CBZ

AGM

Virtual

July 21 2023 | 4pm

 

 	

POSB

AGM

Chapman Golf Club

July 25 2023 |10am

 

 	

Afdis

AGM

Virtual | St Marnocks, Lomagundi Road, Stapleford

July 26 2023 | 12pm

 

 	

RTG

AGM

Rainbow Towers Hotel

July 27 2023 |12pm

 

 	

ZHL

AGM

206 Samora Machel Avenue

July 28 2023 | 10am

 

 	

Delta

AGM

Virtual | Head Office, Northridge Close, Borrowdale

July 28 2023 | 12:30pm

 

 	

 

Heroes’ Day

 

Aug 14

 

 	

 

Defence Forces Day

 

Aug 15

 

 	

zIMBABWE

 

2023 harmonised elections

August 23

 

 	

 

 

 

 

 

 	

Counters trading under cautionary

 

 

 

 	

 

 

 

 

 	

CBZH

GetBucks

EcoCash

 

 	

Padenga

Econet

RTG

 

 	

Fidelity

TSL

FMHL

 

 	

ZBFH

 

 

 

 	

Invest Wisely!

Bulls n Bears 

 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> bulls at bullszimbabwe.com Tel: +263 4 2927658 Cell: +263 77 344 1674

 

 	

 

 

 	
							

 

 

 

 

 

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