Bulls n Bears Daily Market Commentary : 12 June 2023

Tue Jun 13 03:54:32 CAT 2023

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Bulls n Bears Daily Market Commentary : 12 June 2023

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

ZSE commentary

ZSE ticks up in new week…

The market advanced further in the week opener to see the broad All Share index put on 3.23% to end higher at 181,462.64pts while, the ZSE Top Ten Index added 2.47% and settled at 113,012.14pts. The ZSE Agriculture Index rose 4.11% to 676.87pts while, the Mid Cap Index advanced 6.18% to 312,038.43pts. The trio of FBC, CFI Holdings and AFDIS topped the risers after charging a similar 15.00% to close the session at respective prices of $356.5000, $1,685.1500 and $1,424.2000.

Property concern FMP grew 14.93% to $78.9000 while, packaging group Nampak capped the top ten winners of the day on a 14.86% uplift to $59.5000. Trading in the negative territory was apparel Edgars that shed 7.25% to $80.0000 as beverages group Delta retreated 1.93% to close at a vwap of $4,020.9901 on profit taking. Zimplow slipped 0.04% to $109.9550 as tea company Tanganda slid 0.00061% to $1681.9397.

Activity aggregates were depressed in Monday’s session as volumes traded dipped 67.78% to 5.95m shares while, turnover tumbled 44.24% to $5.28bn. Masimba and Econet were the top volume drivers of the day on respective contributions of 45.07% and 21.30%. Anchoring the value aggregate was Delta, Econet and Masimba that accounted for a combined 85.66%. Old Mutual ETF and Morgan and Co MIZ gained an identical 14.99% to settle at $40.2100 and $5.8300 apiece. Datvest ticked up 14.63% to $10.8897 while, Cass Saddle improved 8.56% to $4.2991. A cumulative of 59,085 units worth $647,716.66 exchanged hands in five ETFs. Tigere REIT edged 13.60% to $229.9498 on 94,533 units.  efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South Africa's rand jumps on improving investor sentiment

(Reuters) - The South African rand extended gains on Monday, building from the previous week, as investor sentiment towards Africa's most industrialised economy improved.

At 1517 GMT, the rand traded at 18.5600 to the dollar, about 0.87% stronger than its closing level on Friday.

The dollar was last trading up slightly at 103.450 against a basket of global currencies.

Analysts say the rand's gains come partly on the back of reduced intensity of power cuts at home and speculation that the BRICS summit of emerging countries may be moved out of Johannesburg due to the arrest warrant by International Criminal Court hanging over Russian President Vladimir Putin's head.

"The other factor that investors have cheered in recent days is reduced tensions between (South Africa) and the West regarding Russian relations," said Kieran Siney of ETM Analytics.

South Africa's President Cyril Ramaphosa is expected this week to travel to Russia and Ukraine for an Africa-led peace mission in an attempt to end the ongoing war.

"We usually see these types of dilemmas as an opportunity for foreigners to buy back into (South Africa), even though it is mostly foreigners that created the initial selloff," said Casparus Treurnicht, a Gryphon Asset Management portfolio manager.

The rand has recovered over 6% in June after plummeting around 7% in May.

South Africa's sovereign dollar-denominated bonds also continued their June rally, with the 2044 maturity up and rising 1.153 cents at 1526 GMT to 73.017 cents in the dollar, according to Tradeweb data.

"Real progress in minimising load shedding (power cuts)... is the main driver," said Razia Khan, chief Africa economist at Standard Chartered.

On the Johannesburg Stock Exchange, both the blue-chip Top-40 index (.JTOPI) and the broader all-share index (.JALSH) ended about 0.9% lower.

South Africa's benchmark 2030 government bond was stronger, with the yield down 5.5 basis points to 10.765%.

Investors will also be looking at policy meetings of the U.S. Federal Reserve, the European Central Bank and the Bank of Japan this week, as markets seek clues from policymakers on the future path of interest rates.

Nigeria

Weak Naira Lost 76% Value Under Emefiele

The tenure of Godwin Emefiele as Governor of the Central Bank of Nigeria (CBN), from June 2014 to when he was suspended, shows that the Naira lost about 76.17% of its value.

Emefiele’s tenure as the CBN governor, saw the official exchange rate of the Naira to the US dollar fall from ₦164 to ₦462.4.

Weakened Naira Lost 76% Value Under Emefiele

Suspended CBN governor, Godwin Emefiele

On the parallel market, the Naira depreciated by 76.17% exchanging at a rate of ₦183 to a $1 in 2014, to ₦768 to a $1 in 2023.

The Nigerian local currency lost significant value under Emefiele than most CBN governors since 1999.

Emefiele’s Failed Policies 

Emefiele had in a bid to manage the value of the Naira, introduced a number of policies, such as stopping Forex supply to importers of 41 items that could be produced locally.

And also, offering ₦5 for every $1 remitted to Nigeria through Internal Money Transfer Organisations, and stopping the supply of Forex to Bureaux De Change, among others.

The CBN, in March 2021, introduced the ‘Naira 4 Dollar Scheme’, intended to boost the inflow of Diaspora remittances into Nigeria.

This programme works by paying Diaspora remittance recipients an incentive of ₦5 for every $1 received through a licensed IMT operator.

Also in May 2021, the CBN adopted the NAFEX rate as the benchmark rate. An initiative meant to unify the multiple official rates (CBN rate at N379/$ vs. IEFX rate of N410/$ at the time).

In July 2021, the CBN announced the discontinuation of foreign exchange sales to BDC operators.

Emefiele alleged that some BDCs’ actions contravened the agreement with the apex bank by seeking to maximize profits, which he deemed excessive.

Read Also: Shonubi Takes Over From Emefiele As Acting CBN Governor

In February 2022, the CBN extended the Naira for dollar scheme from the IMTOs to the IEFX window.

However, these policies have not been able to stabilise the Naira.

Also, the World Bank disagreed with the CBN on how it tried to achieve price stabilisation of the Naira.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar inches higher ahead of inflation data, Fed rate decision

(Reuters) - The dollar inched higher on Monday, trading in a narrow range as investors remained cautious ahead of several key policy decisions due this week, with the Federal Reserve expected to keep rates on hold for the first time since January 2022.

Monetary policy meetings at the Fed, the European Central Bank (ECB) and the Bank of Japan (BOJ) will set this week's tone as markets seek clues from policymakers on the future path of interest rates.

U.S. May inflation data is also out on Tuesday as the Fed kicks off its two-day meeting.

"Though it's more likely than not that the Fed will 'skip' a hike this month, it seems as if no one wants to be caught on the wrong side of the market should they choose to hike this month, keeping volatility low across most majors," said Helen Given, FX trader at Monex USA in Washington.

She said everyone seemed to be "holding their breath" and waiting for cues from Fed Chair Jerome Powell.

"A hike Wednesday would likely be very dollar-positive as it would go against current market expectations," Given said.

Money markets are leaning toward a pause from the Fed, according to Refinitiv's FedWatch, but a majority expect a hike in the July meeting.

Conversely, a clear majority of economists polled by Reuters expect the ECB to hike its key rate by 25 basis points on Thursday and again in July, before pausing for the rest of the year as inflation remains sticky.

The U.S. dollar index clocked a loss of nearly 0.5% last week, its worst weekly drop since mid-April, and was last up 0.1% at 103.60.

The euro was up slightly at $1.0760, having risen 0.4% last week, its first weekly gain in roughly a month.

Elsewhere, the Japanese yen slipped 0.2% to 139.55 per U.S. dollar, before a two-day meeting by the BOJ, which is expected to maintain its ultra-loose monetary policy and forecast a moderate economic recovery, as robust corporate and household spending cushion the blow from slowing overseas demand, sources told Reuters. The BOJ announces its policy decision on Friday.

Elsewhere, the Reserve Bank of New Zealand last month signaled it was done tightening after raising rates to the highest in more than 14 years at 5.5%, ending its most aggressive hiking cycle since 1999. That sent the New Zealand dollar tumbling 2.7% in May.

The kiwi was last down 0.1% at US$0.6124, sterling fell 0.6% against the dollar to $1.2510, while the Aussie edged up to US$0.6750 with a holiday in most of Australia making for thinned trade.

China's offshore yuan extended losses to trade at its lowest level against the greenback since November as recent soft data has raised expectations for monetary easing from the People's Bank of China this year. The dollar was last up 0.2% at 7.158.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold eases as dollar firms at start of busy Fed week

Gold prices dipped on Monday as the dollar and bond yields firmed, while traders braced for a busy week of key U.S. inflation prints and major central bank policy meetings, with all eyes on the Federal Reserve.

Spot gold  fell 0.14% to $1,957.6471per ounce. U.S. gold futures

settled 0.4% lower at $1,969.70.

The dollar index edged up 0.12%, making gold more expensive for overseas buyers, while a rise in U.S. Treasury yields made zero-yielding bullion less attractive.

“Going into this week with gold is almost like a coin flip,” said Bob Haberkorn, senior market strategist at RJO Futures.

The U.S. consumer price index for May is due at 8:30 a.m. EDT on Tuesday, with the producer price index reading due on Wednesday morning ahead of the Fed’s interest rate decision later that day.

“The fact that if we get a halt on rate hikes would push gold up pretty big despite a hawkish (Fed) statement,” Haberkorn said.

Markets priced in a 76% chance of the Fed keeping rates unchanged, and a 71% chance of a hike in July, according to CME’s Fedwatch tool.

The European Central Bank and the Bank of Japan will deliver their rate decisions on Thursday and Friday, respectively.

“Gold is trading on the assumption that U.S. interest rates will stay where they are with any hike likely to send the precious metal crashing down towards $1,900 an ounce,” Kinesis Money analyst Rupert Rowling said in a note.

Silver fell 0.82% to $24.0674 per ounce, while platinum dipped 1.79% to $990.4379

Palladium, used in emissions-controlling devices in cars, gained 2.19% to $1,352.3383, after hitting its lowest since May 2019 on Friday.

“Palladium could head back above $1,500 in the fourth quarter of this year owing to improving automotive production, however this is currently under pressure from destocking by the automakers,” said Metals Focus analyst Jacob Smith.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Heroes’ Day

Aug 14

Defence Forces Day

Aug 15

Counters trading under cautionary

CBZH

GetBucks

EcoCash

TSL

Econet

Turnall

First Capital Bank

ZBFH

Fidelity

Zimplow

FMHL

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.

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