Bulls n Bears Daily Market Commentary : 19 July 2023

Thu Jul 20 07:11:57 CAT 2023

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Bulls n Bears Daily Market Commentary : 19 July 2023

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

ZSE maintains losses as central bank readies for ZiG launch

HARARE - Zimbabwe Stock Exchange shares maintained the bearish trend on
Wednesday as lack of new liquidity continues to put a dent on prospects of
recovery amid indications that the central bank will most likely launch
phase 2 (tradability) of the digital gold tokens - referred to as ZiG - by
August 1.

This is expected to tighten ZWL liquidity further as the central bank seeks
to maintain exchange rate and pricing stability. The RBZ is currently having
sensitizing meetings with various industry players where it is indicating
that banks are ready for the launch while a grace period might be given to
retailers to adjust their systems past the Aug 1, launch.

At close, the All Share Index dropped 2.27% to 126 015.43 as market bias
turned negative. Activity continued to be restricted by the limited supply
of ZWL. 

Turnover fell to $887.73 million, the bulk of which came from Delta at
$640.35 million. Trades were at 282 on volume of 2.7 million shares. Delta
was the most active at 62 trades while Turnall saw the most volume at 1.8
million shares.  Foreigners sold $8.58 million against purchases of $103
000.

The Top Ten Index fell 3.37% to 59 160.87. OK Zimbabwe was 6.63% weak to 17
712.41c as investors continue to await the release of its results, which are
however expected to show a decline in volumes and earnings performance.

Delta lost 6.41% to 189 509.69c and EcoCash was down 6.25% to 13 088.87c.
Seed Co shed 2.04% to 168 850c while Meikles and Hippo Valley pared 0.40%
and 0.38% respectively.

The Medium Cap Index shed 0.17% to 451 411.49. ART fell 15% to 5 100c in a
low volume trade of 500 shares. Zimre Holdings extended its losses after
dropping 5.02% to 7 123.81c to sit on a year to date gain of 1 672%

Movement upwards was quite limited with Fidelity Life topping the risers
after gaining 4.01% to 10 505c. Dairibord added 1.69% to 29 591.88c and RTG,
which is trading under a cautionary statement, put on 1.44% to 11 766c.

Truworths was 7.75% lower to 1 050c amid an ongoing rights issue which seeks
to raise nearly US$500 000. As a result, the Small Cap was down 3.90% to 2
100 069.29.

The Morgan & Co MIZ was the outstanding performer on the ETFs gaining 14.35%
to 656.35c and the Cass Saddle put on 1.29% to 593.89c. There were, however,
losses in the Datvest MCS (-3.16%) and the Old Mutual Top Ten (-7.57%).
Total volume was at 60 245 shares on turnover of $438 222.

VFEX was weak with the All Share dropping 0.94% to 71.28. Zimplow was the
worst performer after a 7.20% loss to 4.64 US cents. Padenga Holdings
dropped 3.89% to 19.77 US cents and Innscor was 1.91% lower to 44 US cents.
African Sun was down 2.5% to a 52-week low of 3.51c. Other losses were seen
in Bindura, First Capital, Seed Co International and Simbisa. Total turnover
was a lowly US$41 334 and market capitalisation was at US$1.2 billion.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand tracks dollar, unmoved by Putin's BRICS no-show

(Reuters) - The South African rand slipped against a stronger U.S. dollar on
Wednesday, showing little reaction to the news that Russian President
Vladimir Putin will not attend a summit of the BRICS nations next month in
Johannesburg.

The announcement that Putin would not be at the summit ended months of
speculation about whether South Africa would arrest him because of a warrant
issued by the International Criminal Court.

The rand also reacted little to data showing local inflation fell more than
expected in June, to a 20-month low, with traders likely holding off from
big bets before an interest rate announcement on Thursday.

At 1510 GMT, the rand traded at 17.9500 against the dollar , around 0.4%
weaker than its previous close. The dollar was up about 0.4% against a
basket of currencies.

Consumer inflation slowed to 5.4% year-on-year in June from 6.3% in May
(ZACPI=ECI), (ZACPIY=ECI), below a Reuters consensus forecast of 5.6% and
within the central bank's target range of 3% to 6% for the first time since
April 2022.

Easing price pressures bolster the case for the central bank to keep its
main interest rate (ZAREPO=ECI) steady on Thursday after 10 hikes in a row,
which is already what most economists have predicted.

Casey Delport, an investment analyst at Anchor Capital, said markets were in
a 'wait and see' phase.

Anchor Capital is among a minority that expects the South African Reserve
Bank (SARB) to raise rates by 25 basis points on Thursday. It cites
inflation expectations still exceeding the bank's preference among reasons
for its prediction.

Data on Wednesday also showed South African retail sales fell 1.4%
year-on-year in May after declining by a revised 1.8% in April.

The Johannesburg Stock Exchange's blue-chip Top-40 index (.JTOPI) was last
flat on its previous close. South Africa's benchmark 2030 government bond
was marginally firmer, as the yield fell 1.5 basis points to 10.310%.

Nigeria

Naira plummets to N860/$ at parallel market as dollar demand intensifies

The naira has continued its downward spiral, falling to N860 per dollar at
the parallel market on Wednesday.

The figure represents a N35 or 4.2 percent depreciation compared to the N825
it traded yesterday.

With the depreciation, the gap between the official and parallel market
exchange rates is widening once again.

The naira has consistently experienced fluctuations since the government
unified the exchange rate windows.

At the investors and exporters (I&E) window, the local currency appreciated
by 6.58 percent against the dollar to close at N742.9 on Tuesday, according
to FMDQ OTC Securities Exchange - platform that oversees foreign-exchange
trading in Nigeria.

Bureaux De Change (BDC) operators in Lagos and Ogun who spoke to TheCable on
Wednesday said there is high demand for foreign currency in the
parallel/street market.

The street traders, popularly known as 'abokis' put the buying price of the
dollar at N840 and the selling price at N860, leaving a profit margin of
N20.

When asked the reason for the decline of the naira against the dollar,
Abubakar, a BDC operator in the Agbara area of Ogun state, said there has
been increased demand for dollars amid a supply shortage in the market.

"Dollar is scarce now in the market. How much do you need? I can find it for
you," he told TheCable.

 <mailto:info at bulls.co.zw> 

Global Markets

IMF says dollar's rise hit emerging markets harder than advanced economies

(Reuters) - Emerging market economies bore the brunt of the strongest U.S.
dollar in two decades in 2022, a rise that battered them with capital
outflows, higher import prices and tighter financial conditions, the
International Monetary Fund said on Wednesday.

The IMF said new research in its annual External Sector Report shows that
the dollar's surge last year had a bigger impact on emerging markets than on
smaller advanced economies, partly due to the latter group's more flexible
exchange rates.

For every 10% of U.S. dollar appreciation linked to global financial market
forces, emerging market economies faced a gross domestic product (GDP)
output decline of 1.9% after one year, a drag that is expected to linger for
2.5 years, the IMF said.

The same research showed the impact was far lower in advanced economies,
with output reduction peaking at 0.6% after one quarter and the effects
largely gone within a year.

The IMF said in the report that the dollar's real effective exchange rate
rose by 8.3% in 2022 to its strongest level in two decades, amid a rapid
series of Federal Reserve rate increases to curb inflation and higher global
commodity prices driven by Russia's invasion of Ukraine.

"Emerging market and developing economies with pre-existing vulnerabilities
such as high inflation and misaligned external positions experienced greater
depreciation pressures, while commodity-exporting economies benefited from
the increase in commodity prices," the IMF said.

Many emerging market economies suffered worsening credit availability,
diminished capital inflows, tighter monetary policy, and bigger stock market
declines.

In advanced economies, more flexible exchange rates were able to absorb some
of the impact through depreciation, while more accommodative monetary policy
also helped - provided that there were firmly anchored inflation
expectations, the IMF said.

"More anchored inflation expectations help by allowing more freedom in the
response of monetary policy. After a depreciation, a country can run a
looser monetary policy if expectations are anchored. The result is a
shallower initial decline in real output," the report's authors said in a
blog posting.

"In turn, emerging market economies with more flexible exchange rate regimes
tend to enjoy a faster economic recovery owing to a sizable immediate
exchange rate depreciation."

The IMF recommended that emerging market countries move toward flexible
exchange rates by developing domestic financial markets that reduce the
sensitivity of borrowing to the exchange rates, and commit to improving
fiscal and monetary frameworks, including central bank independence, to help
anchor inflation expectations.

The External Sector Report showed IMF staff assessed that the dollar was
over-valued in 2022 by 3.5% to 14.6%, with a midpoint of 9%. As of April
2022, the IMF said the dollar's value was 0.5% below its 2022 average.

The Fund also said that the euro was over-valued in some eurozone countries,
by about 10% in Italy and Finland, while it was undervalued in others, by 8%
in Germany.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold retreats from 1-1/2-month high even as traders bet on Fed rate pause

Gold prices pulled back on Wednesday from a 1-1/2-month high scaled in the
previous session even as investors bet that recent U.S. economic readings
make the case for a pause in the Federal Reserve's interest rate-hike
stance.

* Spot gold was down 0.1% at $1,978.09 per ounce by 0043 GMT, after hitting
its highest since May 24 at $1,984.19 on Tuesday.

* U.S. gold futures were flat at $1,981.60.

* The dollar index wobbled near more than a one-year low.

* U.S. retail sales rose less than expected in June, increasing 0.2% last
month, against the 0.5% forecasted by economists polled by Reuters. Consumer
spending, however, appeared to be solid.

* Economists polled by Reuters see the Fed raising its interest rate by 25
basis points to the 5.25%-5.50% range on July 26, with a majority saying it
would be the last increase of the current tightening cycle.

* Lower interest rates decrease the opportunity cost of holding non-yielding
bullion.

* Big U.S. banks said on Tuesday higher interest rates helped boost profit
in the second quarter, causing shares to spike, but a pullback in consumer
spending, slower loan growth and increased deposit costs may cloud the
outlook for the sector.

* Meanwhile, confidence at big Japanese manufacturers fell in July for the
first time in six months, the Reuters Tankan survey showed on Wednesday, in
a sign of growing exporter concern about weakening overseas demand.

* Spot silver fell 0.1% to $25.06 per ounce, platinum was up 0.2% at
$984.42, while palladium fell 0.2% to $1,317.16. DATA/EVENTS (GMT, June)
0600 UK Core CPI YY 0600 UK CPI YY 0900 EU HICP Final MM, YY 1230 US Housing
Starts Number 

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
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for guideline purposes only and sourced from third parties.

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