Bulls n Bears Daily Market Commentary : 20 July 2023

Fri Jul 21 05:00:20 CAT 2023

 <http://www.bullszimbabwe.com> Bullszimbabwe.com
<mailto:bulls at bulls.co.zw> Views & Comments
<http://www.bullszimbabwe.com> Bullish Thoughts
<http://www.twitter.com/BullsBears2010> Twitter
<https://www.facebook.com/BullsBearsZimbabwe> Facebook
<http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn
<mailto:%20bulls at bullszimbabwe.com?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 20 July 2023

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

The ZSE widened the magnitude of losses on Thursday following what seemed
like a sign of recovery in early week trades when the magnitude
marginalized. The mainstream ZSE All Share Index dipped -2.95% today to
close at a 6-weeks low of 122,294.5 points. Heightened sell-offs in market
heavies and medium caps heavily weighed on prospects of recovery. The
tightened liquidity in the economy has led to stifled demand of stocks as
well as overall demand on the market.

ETFs turnover was poor at $247 127. Performance was weak with the Morgan &
Co MS, the worst after losing 14.89% to 20 000c. The Old Mutual Top Ten was
down 3.81% to 2 398c and the Datvest MCS was 2.17% lower to 900c.

The ZSE capped today's trades at a month-to-date loss of -28.65% while
year-to-date nominal gains were trimmed to 527.35%. In US$ terms, however,
the bourse has succumbed to a loss of -9.7% since the beginning of the year.

The VFEX closed higher after putting on 0.42% to 71.57. Bindura rose 19.80%
to 1.21 US cents and First Capital was 7.53% to 2 US cents. Padenga, which
is trading under caution pending the reorganisation of its business, added
2.42% to 19.50 US cents and Axia put on 2%.  Marginal losses were seen in
Innscor and Simbisa. Turnover remained low at US$47 837 while market
capitalisation closed at US$1.22 billion.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand drops on firm dollar, muted reaction to central bank
move

(Reuters) - South Africa's currency weakened on Thursday on the back of a
strong dollar as the local central bank's largely expected move to hold its
key interest rate steady had a muted impact on the currency.

The rand traded at 17.9700 against the dollar at 1556 GMT, 0.56% weaker than
its previous close as the greenback gained after data from the U.S showed
the number of people claiming unemployment benefits have fallen.

That sparked concerns the Federal Reserve might continue its rate hike
measures after next week's almost expected 25 basis points hike.

The dollar was trading at almost 0.5% stronger against a basket of
currencies.

"The rand weakness was primarily driven by a firmer dollar as markets were
largely pricing in a rate hold," said Warren Venketas, an analyst at Daily
FX, referring to the local central bank decision.

The South African Reserve Bank (SARB) held its interest rate steady at 8.25%
after 10 consecutive hikes as the country's consumer price inflation eased
to 5.4% this week, back into the target range of 3%-6% of the central bank.

But bank Governor Lesetja Kganyago strongly cautioned against construing the
move as a beginning of its rate pause cycle, unlike what many central banks
across the world are expected to do.

"Have interest rates peaked? The answer is a resounding no," he said, adding
the current rate reflected elevated inflation expectations and outlook.

Economists are divided on the outlook for inflation.

"We think that inflation will continue to moderate and it will reach the mid
point of the bank's target range sooner than expected," said Khanyisa Phika,
an economist at Alexforbes, a South African financial services firm.

She said interest rates had peaked in South Africa.

The SARB strives to keep inflation at the mid-point of its 3%-6% target
range.

Local lender FNB said it expected rate hike cycle to resume as inflationary
pressures continue to hover in the midst of widening current account deficit
and its funding concerns.

Shares on the Johannesburg Stock Exchange slipped marginally with the
benchmark all-share index (.JALSH) down 0.08% and the blue-chip index of top
40 companies (.JTOPI) losing 0.07%.

South Africa's benchmark 2030 government bond was weaker, with the yield up
5 basis points to 10.355%.

Kenya, Nigeria, Zambia currencies set to weaken further

(Reuters) - Kenya's shilling, Nigeria's naira and Zambia's kwacha are
expected to weaken further in the week to next Thursday, while Ghana's cedi
and Uganda's shilling could strengthen, traders said.

KENYA

Kenya's shilling is expected to weaken further in the coming week, driven by
demand for dollars from the manufacturing and energy sectors.

Commercial banks quoted the shilling at 141.70/90 per dollar, a record low,
according to Refinitiv data, and compared with last Thursday's closing rate
of 141.30/50.

"It just continues to weaken. We have (demand) from oil (retailing
companies) and manufacturing," a trader at one commercial bank said.

NIGERIA

Nigeria's naira will likely weaken slightly in the coming week as liquidity
shortage in the official window persists even after the central bank removed
restrictions on the exchange rate market, traders said.

The naira hit a low of 831 against the dollar on the official market on
Tuesday, edging closer to the 840 reported by the FMDQ Exchange late last
month. It is currently weaker on the black market at 860 naira.

"A lot of participants in the official window have not been able to fill
their orders, and are turning to the black market," one trader said.

ZAMBIA

Zambia's kwacha is likely to continue trading weaker against the dollar next
week as hard currency remains scarce amidst high demand from energy sector
importers.

On Thursday, commercial banks quoted the currency of Africa's second-largest
copper producer at 19.4600 per dollar, down from 18.7000 a week ago.

"The local currency is expected to decline in value in the short run,"
Access Bank (ACCESS.GH) said in a note.

GHANA

Ghana's cedi is expected to strengthen against the dollar next week due to
muted corporate demand for forex and remittance inflows, traders said.

Refinitiv Eikon data showed the cedi trading at 11.5000 to the dollar on
Thursday, compared to 11.0000 at last Thursday's close.

"The cedi has been on the front foot in recent sessions, mainly on the back
of improved remittance flows on the market," said Sedem Dornoo, a senior
trader at Absa Bank Ghana.

"We expect the local unit to continue to strengthen in the coming sessions,
especially given current lacklustre FX demand," he added.

Other traders also said low demand for dollars would likely keep the
currency steady or boost it over the coming week.

UGANDA

Uganda's shilling is expected to post gains on the back of inflows from
non-governmental organisations converting their dollar holdings to meet
month-end obligations.

Commercial banks quoted the shilling at 3,640/3,650, compared with last
Thursday's closing rate of 3,665/3,675.

"Some (dollar) inflows from charities are expected as we head into the last
week of the month," said one independent foreign exchange trader in the
capital Kampala.

NGOs that receive donations in hard currency convert some of it to pay
salaries and other operational expenses at the end of each month.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar gains as drop in US jobless claims boosts rate-hike bets

(Reuters) - The dollar gained against a basket of currencies on Thursday
after data showed that the number of Americans filing new claims for
unemployment benefits unexpectedly fell last week, boosting expectations the
Federal Reserve may continue hiking interest rates if the economy remains
strong.

Initial claims for state unemployment benefits dropped 9,000 to a seasonally
adjusted 228,000 for the week ended July 15, the Labor Department said.
Economists polled by Reuters had forecast 242,000 claims for the latest
week.

The odds that the U.S. central bank would continue to raise rates after a
widely expected 25-basis-point increase next week edged higher after the
data. Fed funds futures traders are pricing in an additional 34 basis points
of tightening, up from expectations of another 32 basis points of increases
on Wednesday.

"The market has been searching for signs of layoffs in the U.S. and they
simply aren't materializing," said Adam Button, chief currency analyst at
ForexLive in Toronto. "Today's initial jobless claims number underscores
again that the U.S. has an extremely strong labor market and that the Fed
still has more work to do."

Other data on Thursday showed that U.S. existing home sales dropped to a
five month-low in June, depressed by a chronic shortage of houses on the
market that slowed the pace of decline in annual house prices.

Investors will focus on comments by Fed Chair Jerome Powell after the U.S.
central bank's interest rate decision on Wednesday for any new clues on
whether it is likely to raise rates again in September.

The dollar had tumbled after cooling consumer and producer inflation
releases last week indicated that price pressures may be closer to returning
to the Fed's 2% inflation target.

The dollar index rose 0.62% against a basket of currencies to 100.85. The
euro fell 0.67% to $1.1127.

The European Central Bank will raise interest rates by 25 basis points on
July 27, according to all economists in a Reuters poll, a slight majority of
whom were now also expecting another hike in September.

Sterling continued to fall after data on Wednesday showed that Britain's
rate of inflation was its slowest in more than a year at 7.9%, which is
likely to ease some of the pressure on the Bank of England to keep raising
interest rates sharply. A key British mortgage rate also fell on Thursday
for the first time in nearly two months.

The British currency is down 0.61% at $1.2859 and has fallen from $1.3144
last Thursday, which was its highest level since April 2022.

The greenback rose 0.35% against the Japanese yen to 140.20.

Japan's government on Thursday forecast inflation sharply exceeding the
central bank's 2% target this year, acknowledging broadening price rises
that may keep alive market expectations of an end to ultra-low interest
rates.

The greenback lost 0.77% against the offshore Chinese yuan to 7.1764 .

China left lending benchmarks unchanged on Thursday, and its central bank
added that it had raised a cross-border financing ratio that dictates the
maximum any company can borrow as a proportion of its net assets, allowing
domestic firms to tap overseas markets for funds.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold shines again with an end to the Fed's tightening cycle in sight

Money managers increased their bullish gold bets by 1,414 net-long positions
to 100,619 - a five-week high, reflecting healthy appetite for gold,
according to weekly CFTC data.

Speculators had already increased their positioning towards the back end of
last year and the start of this year - on the expectation that the Fed is
not too far from the peak Fed funds rate.

However, global physically-backed gold exchange-traded funds (ETFs)
experienced net outflows in June, calling a halt to their three-month inflow
streak, with the majority of the outflows occurring when the gold price fell
during the second half of the month amid hawkishness from central banks due
to inflationary pressures. All regions except Asia experienced outflows
during the month. June's outflows caused global gold ETF demand during the
first half of 2023 to turn negative at 50 tonnes, equivalent to fund
outflows of $2.7bn, according to data from the World Gold Council (WGC).

China continues to boost gold reserves

Meanwhile, Chinese appetite for physical gold should remain a supportive
factor for gold this year. The People's Bank of China (PBoC) announced
buying 16 tonnes in May, its seventh consecutive month of purchases. Its
gold reserves now stand at 2,092 tonnes.

China's gold imports also rebounded in May. China's gold imports totalled
148 tonnes in May, a 24-tonne month-on-month rise, according to data from
the WGC. This amounts to a 121 tonnes surge compared with May 2022, at which
time key cities were under Covid-19 lockdowns.

Other central banks also continued to boost its reserves. The National Bank
of Poland added 19 tonnes during the month, lifting its gold reserves to 263
tonnes. The central banks of Singapore (4 tonnes), Russia (3 tonnes), India
(2 tonnes), the Czech Republic (2 tonnes) and the Kyrgyz Republic (2 tonnes)
were the other notable buyers in May.

Gold tends to become more attractive in times of instability and demand has
surged over the past year. Last year, global central banks purchased a
record 1,078 tonnes of gold, mostly driven by a flight towards safer assets
amid soaring inflation. We expect central banks to remain buyers, not only
due to geopolitical tensions but also due to the economic climate.

Gold prices recovered in the past week from three-month lows following the
release of the US consumer price index for June, which could ease the
pressure on the Fed to keep raising rates to slow rising prices.

Rising interest rates have been a significant headwind for gold for over two
years now. As a non-yielding asset, gold normally benefits from a more
dovish US monetary policy.

Last week's CPI report showed consumer prices growing by just 0.2% in June,
the slowest monthly pace since August 2021.

The US data this week showed retail sales rose by 0.2% in June from the
prior month, below May's rise of 0.3% and consensus expectations for a 0.5%
rise.

Our US economist believes that with the activity backdrop for the US looking
more mixed and the inflation story looking more favourable, the data
seemingly supports the narrative of the Fed hiking rates again in July, but
pausing again in September, perhaps for several months.

We believe that for gold, the Fed policy is still key for gold over the
medium term. We believe the downside remains limited for gold as the Fed is
close to the end of its monetary tightening cycle, with the expected hike at
the Fed's meeting next week already priced in for bullion.

We see prices moving higher over the second half of next year, given that
the Fed should start to pause its rate hiking cycle, while geopolitical
instability will also provide headwinds for gold prices looking forward.

We forecast prices to average $1,900/oz in the third quarter and $1,950/oz
in the fourth quarter. We expect prices to move higher again in the first
quarter of 2024 to average $2,000/oz with the assumptions around this that
the Fed starts cutting rates in the first quarter of next year. 

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 

Cellphone:      <tel:%2B263%2077%20344%201674> +263 77 344 1674

Alt. Email:       <mailto:info at bulls.co.zw> bulls at bullszimbabwe.com  

Website:         <http://www.bullszimbabwe.com> www.bullszimbabwe.com  

Blog:
<http://www.google.com/url?q=http%3A%2F%2Fwww.bulls.co.zw%2Fblog&sa=D&sntz=1
&usg=AFQjCNFoIy6F9IXAiYnSoPSgWDYsr8Sqtw> www.bullszimbabwe.com/blog

Twitter:         @bullsbears2010

LinkedIn:       Bulls n Bears Zimbabwe

Facebook:
<http://www.google.com/url?q=http%3A%2F%2Fwww.facebook.com%2FBullsBearsZimba
bwe&sa=D&sntz=1&usg=AFQjCNGhb_A5rp4biV1dGHbgiAhUxQqBXA>
www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 34378 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0002.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.png
Type: image/png
Size: 387089 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0003.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 37761 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0003.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 29289 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0004.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image005.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: oledata.mso
Type: application/octet-stream
Size: 130926 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20230721/8917209b/attachment-0001.obj>