Bulls n Bears Daily Market Commentary : 15 June 2023

Fri Jun 16 04:09:49 CAT 2023

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Bulls n Bears Daily Market Commentary : 15 June 2023

ZSE commentary

ZSE records slight gains in Thursday's trades.

The market recorded marginal gains in the penultimate session  of the week
as the All-Share Index rose 1.24% to close trading at 187,657.43pts. The
Blue-Chip Index was up 0.45% to settle at 114,538.80pts while, the
Agriculture Index added 2.70% to end at 685.31pts. The Mid-Cap Index was the
major gainer amongst the indices we review as it surged 4.08% to
347,044.03pts. The trio of AFDIS, FBC and CFI led the risers of the day as
they surged a similar 15.00%, to settle at $1,882.5500, $542.1000, and
$1,937.9000 respectively.

Agriculture logistics group TSL buttressed prior session's gains as it
soared 14.29% to trade at $800.0000 while, banking group CBZ fastened the
top five gainers' list of the day on a 12.91% climb. Conglomerate Meikles
led the fallers' pack on a 10.91% slump to end pegged at $2,100.0000.
Telecommunications giant Econet declined 2.90% to settle at a VWAP of
$1,052.2470 while, retailer OK Zimbabwe whose results are now imminent
retreated 2.48% to $297.4683. Sugar processor Star Africa eased 1.04% to
$6.0959 while; beverages giant Delta closed at $3,983.9978 following a 1.01%
loss.

Activity aggregates were depressed as volumes traded fell 57.10% to 8.63m
shares while, turnover declined 87.08% to $3.39bn. Market capitalisation
increased by 1.28% to $14.36 trillion. Nampak and Mashonaland holdings drove
the volume aggregate as they contributed a combined 71.72% of the total. CFI
and Delta anchored today's turnover claiming 48.67% and 18.66% of the value
traded respectively. In the ETF category, a total of three counters rose
while, the remaining two were stable at prior sessions trading prices. Old
Mutual Top Ten led the risers' list as it jumped 13.26% to $52.0000 while,
Cass Saddle and the Datvest MCS ticked up 0.09% and 0.03% respectively. The
Tigere REIT closed 0.14% higher at $301.9713 as 8,697 units exchanged
hands..-efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand gains after US Fed pause

(Reuters) - The South African rand extended its gains on Thursday, a day
after the U.S. Federal Reserve opted to keep interest rates unchanged.

At 1530 GMT, the rand traded at 18.3000 against the dollar , 0.25% stronger
than its previous close. On Wednesday, the rand gained over 1% to its
strongest level in five weeks.

"We have now seen ten consecutive days of gains, a run only bettered twice
in history - in 1994 and 2006," said Rand Merchant Bank analysts in a
research note, adding that this recovery was the most rapid in this cycle.

The dollar index last traded at 102.29, about 0.62% weaker than its closing
level on Wednesday.

Like most emerging market currencies, the risk-sensitive rand is susceptible
to moves in global drivers such as U.S. monetary policy and the dollar in
the absence of local catalysts.

Shares on the Johannesburg Stock Exchange closed higher, with both the
broader all-share index (.JALSH) and blue-chip Top-40 index (.JTOPI) ending
up about 0.6%.

South African financial markets are closed on Friday on account of Youth
Day.

South Africa's benchmark 2030 government bond was weaker, with the yield up
3.5 basis points at 10.740%.

Nigeria

Nigeria's naira recorded a historical plunge after being floated freely

The decision by the Central Bank of Nigeria (CBN) to float the naira freely
has come with an unwanted outcome: a historical fall of the value of
currency against the US dollar.

Intended to curb dollar scarcity and curtail parallel forex exchange
markets, the move has sent the naira down by 36% on the official market on
June 14. The new policy removed trading restrictions on the official market,
forcing the naira to go from 477 per US dollar on June 13 to 750 on June 14.
As of June 15, the black market rate stood at 760 per US dollar.

Nigeria awaits a Supreme Court determining whether old naira banknotes
should remain legal tender for longer

As buyers and sellers of foreign currency in the official forex market
continue to quote rates they find comfortable, compared to previous practice
where rates were dictated by the Nigeria central bank, the naira could reach
800 against the US dollar.

Though it remains a wait-and-see situation, analysts expect the currency
float to help close the gap between official and parallel market exchange
rates, boost investor confidence, increase foreign inflows, reduce import
costs, and ease pressure on the naira.

Quotable: The upside of a floating naira

"Given that this new rate in the official market is the same as the parallel
market, there is no incentive for people and businesses with genuine
transactions to patronize the parallel market, hence FX trading activity in
the parallel market will slow down significantly," Abiola Rasaq, an
economist and former head of investor relations at United Bank for Africa
quoted in Business Day on June 14

Change is afoot

The move to float the naira came just days after Nigerian president Bola
Tinubu suspended the embattled central bank governor Godfrey Emefiele,
during whose term the black market for foreign exchange thrived. Allegations
of corruption forced Emefiele into self-exile abroad in January.

Following his suspension, the local banking index surged 23% on June 14, a
20-year high, as investors rushed to trade shares of banking institutions.
More than 10 stocks gained 10% on June 14 as demand in the Nigerian stock
market soars.

However, the willing-buyer-willing-seller mode of forex trading could hurt
the economy in the long term, analysts say, and achieve the exact opposite
of what the CBN targeted, as sellers seek to offload their US dollars to the
highest bidders.

Fiscal policy partner PWC Taiwo Oyedel told local publication the Punch that
the government's "external debt of $42 billion will increase by the
difference between the old and new rates." He also warned that state's
coffers could suffer: "Corporate tax collection may decline as many
businesses crystallize forex losses due to the higher exchange rate."

 <mailto:info at bulls.co.zw> 

Global Markets

Euro advances, surges to 15-year peak vs yen, after ECB lifts rates

(Reuters) - The euro hit a 15-year peak against the yen and a five-week high
against the dollar on Thursday after the European Central Bank raised
interest rates for the eighth straight time and signaled further tightening
to bring euro zone inflation to its medium-term target of 2%.

The ECB lifted rates by 25 basis points (bps), as expected, to 3.5%, the
highest in 22 years.

Its staff have also increased their forecasts for inflation excluding energy
and food, especially for this year and next, owing to past upward surprises.
The inflation projection for this year was raised to 5.1% from 4.6%.

"Our baseline expectation is a final 25-bp hike in July to a terminal rate
of 3.75%. The risks remain clearly to the upside," wrote Deutsche Bank in a
research note led by chief economist Mark Wall.

"There were hawkish elements in the latest ECB press conference, in
particular the upwardly revised 2025 inflation forecasts. There were a few
dovish elements too. President (Christine) Lagarde clearly signaled a hike
in July but deliberately avoided guiding expectations for September."

In afternoon trading, the euro was last up 1.1% at $1.0948 after earlier
touching a five-week high of $1.0952 against the dollar. Versus the yen, the
euro rose 1.2% to 153.52 , hitting 153.68 yen, the highest since September
2008, following the ECB decision.

The ECB move came a day after the U.S. Federal Reserve left interest rates
unchanged but signaled further rate hikes to come this year

The Fed's policy decision snapped a string of 10 consecutive rate hikes, but
the projections, or dot plot, showed policymakers expect two more increases
by the end of 2023. Chair Jerome Powell said rate cuts in 2023 would not be
appropriate.

The Bank of Japan follows on Friday, when it is expected to maintain its
ultra-dovish stance and yield-curve control settings.

The dollar index , which measures the currency against a basket of other
major currencies, was last down 0.8 at 102.11. Earlier in the session, the
index dropped to 102.08, a five-week low.

"Risks appear to be tilted towards more losses (for the dollar) ... a break
to new-range lows. The (dollar index) looks more or less fairly valued,
based on the two-year spreads versus its major currency peers," Shaun
Osborne, chief FX strategist, said at Scotiabank in Toronto.

"Beyond the near-term outlook for rates, the U.S. dollar may be looking at a
somewhat more challenging environment. The global monetary policy cycle is
approaching its end game. We have assumed for some time that the rate-cycle
peak would be a negative for the dollar peak yields will bolster risk-taking
and encourage investors to deploy capital away from the U.S. dollar."

The dollar briefly trimmed losses after data showed U.S. retail sales
unexpectedly rose in May, increasing 0.3% last month after rising 0.4% in
April. Economists polled by Reuters had forecast sales slipping 0.1%.

A separate report from the U.S. Labor Department on Thursday showed initial
claims for state unemployment benefits unchanged at a seasonally adjusted
262,0000 for the week ended June 10. Economists polled by Reuters had
forecast 249,000 claims for the latest week.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Prices Slide Again Thanks To Fed's Hawkish Pause

Gold prices slipped further in Asia and Europe on Thursday as this market
like all others digested the United States Federal Reserve's widely
anticipated decision to pause its long interest-rate hiking cycle in the
previous session.

As higher interest rates tend to hit non-yielding assets like gold hard, the
Fed's call might have been expected to support the market. However, the US
central bank seems to have decided that the hiatus is to be little more than
what might be (and surely will be) termed a 'hawkish pause.'

What that means is that, while the central bank fully expects to increase
the Federal funds rate again, possibly more than once, it intends to wait a
while and gauge the effect of its previous set of increases.

With this in mind, it's less hard to see why the gold market should have
slipped. Hopes that the US might be close to ending its cycle of monetary
tightening are arguably the brightest spot for investors in the oldest
haven. Most other central banks are still likely in the thick of theirs
given the global stubbornness of inflation.

Still, rampant inflation will probably keep a floor under the gold market,
While the true utility of the metal as a hedge against rising prices is a
subject of endless economic debate, plentiful investors insist that it is.
It's notable that prices remain close to historic high levels despite much
higher interest rates more or less everywhere.

The backdrop of war in Ukraine, tensions in the South China Sea, and the
durability of post-covid recovery are also clearly supportive of perceived
'haven assets.'

The week has a bit of event risk left for this market, with US retail sales
and sentiment data likely to leave their mark on interest rate expectations
and, through them, on gold.

GOLD PRICES TECHNICAL ANALYSIS

Having declined sharply from the highs of early May, gold prices are now
flirting with psychological support at $1930/ounce. They've been below it on
an inta-day basis this session and a daily or weekly close below there would
be a first for very nearly three months.

Should that point give way focus would probably move very quickly on to
support at $1901.80. That's where the second Fibonacci retracement of the
rise from November's lows to May's peaks comes in.

The bears would need to really grasp the reins to push the market much lower
than that, however, but, should they do so, the $1825 level at which the
market bounced back in March will probably be in focus.

Bulls have plenty of work ahead of them, but their first order of business
will probably be to try and attack the upper bound of the current descending
channel. That comes in at $1958.81 on Thursday, not too far above the
current market. However, an attack on that will require a bigger daily move
than we've seen so far this week and it's far from certain that such impetus
is out there.

IG's own sentiment data suggest that the market could be set to fight back a
little after recent heavy losses. 72% of respondents are apparently bullish
at current levels.

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
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been compiled from sources believed to be reliable, but no representation or
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