Bulls n Bears Daily Market Commentary : 27 June 2023

Wed Jun 28 06:43:33 CAT 2023

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Bulls n Bears Daily Market Commentary : 27 June 2023

ZSE commentary

Zimbabwe Stock Exchange (ZSE)

The overall Market Cap for today increased by 1.41% to close at ZWL 14.05
billion. Total turnover dropped by 48.53% to close at ZWL1.32 billion, with
a drop of 60.05% in the total volumes traded which closed at ZWL855
thousand. Delta, Ecocash Holdings Ltd and Seed Co, were today's three most
traded counters with a total contribution of 96% to the total turnover.

The benchmark All-Share Index firmed by whopping 1.10% to close at
171,888.96 points with 19 risers and only 4 decliners. The Top 15 Index
improved by 0.85% to 120,543.54 points with the Top 10 Index also increasing
by 0.04% to close at 94,560.24 points.

Cafca and BAT Zimbabwe topped the risers' list for the day after gaining
15.00% each to close at $1,335.15 and $11,041.60, respectively.  Unifreight
Africa, First M. Limited and Willdale capped the list after each added
14.98%,14.96% and 14.87% to close at $238.00, $93.00 and $17.23,
respectively.

CBZ Holdings traded top of the decliners list for the day after shedding of
15.00% to later close at a price of $2,928.25. Riozim, Meikles Limited and
Seed Co also traded negative today. Each of these counters lost 0.05%, 0.02%
and 0.01% to close at $423.00, $1,285.00 and $1,999.84, respectively.

Victoria Falls Stock Exchange (VFEX) 

The VFEX All Share Index lost 0.15% to close at 76.89 points.- Akribos
Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand gains amid speculation Putin may skip BRICS summit

(Reuters) - The South African rand strengthened on Tuesday as analysts
speculated the weekend's aborted mutiny in Russia may mean President
Vladimir Putin could skip BRICS summit where South Africa would in theory be
obliged to arrest him.

The BRICS group of emerging economies, comprising Brazil, Russia, India,
China and South Africa, is due to hold a summit in Johannesburg in August.

At 1521 GMT, the rand traded at 18.4900 against the dollar , about 0.94%
stronger than its previous close.

The International Criminal Court (ICC) issued an arrest warrant in March for
Putin, accusing him of the war crime of illegally deporting hundreds of
children from Ukraine.

South Africa, as an ICC member, would theoretically be required to arrest
Putin if he attends the summit, and a failure to do so could fuel tensions
with the West.

South Africa-based financial experts on Tuesday questioned whether Putin
would now want to attend the Johannesburg summit after the aborted mutiny by
Russian mercenary chief Yevgeny Prigozhin on Saturday that appeared to
reveal cracks in the chief's grip on power.

"This coup attempt may have happened at the perfect time for SA to defuse
the situation in that it may well encourage Russian President Putin to stay
at home and render any debates around whether SA would arrest him, should he
arrive, null and void," ETM Analytics said in a research note.

Also supporting the rand was a softer dollar on global markets and
less-intense power cuts by state utility Eskom, after an improvement in its
generation capacity.

Many South Africans were facing power cuts of around 10 hours a day until
recently, but there have been some signs of improvement in the last few
weeks as the country grapples with its worst power crisis on record.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI)
closed 0.55% stronger.

South Africa's benchmark 2030 government bond also firmed, with the yield
down 8.5 basis points to 10.520%.

Additional reporting by Bhargav Acharya; Editing by Alexander Winning,
Sherry Jacob-Phillips and David Evans

Nigeria

Naira strengthens as demand for dollars moderates at parallel market

Naira on Tuesday gained 0.13 percent (N1/$1) against the dollar at the
parallel segment of the foreign exchange market as demand moderated.

During the intra-day trading on Tuesday, the dollar was quoted at the rate
of N772 as against N773 quoted on Monday at the unofficial market.

Some of the street traders at Apapa and Festac areas of Lagos who were busy
with Muslim festival preparations said there were low demands for dollars
compared to the previous day. Some of them said they would be traveling for
the festive season.

Read also: Sallah celebration muted as Nigerians battle rising cost

Naira on Monday appreciated at the Investors and Exporters (I&E) forex
window, Nigeria's official foreign exchange market, gaining 0.25 percent
following increased dollar supply.

After trading on Monday, the dollar was quoted at the rate of N768.17 as
against N770.17 quoted on Friday at the I&E window, data from the FMDQ
indicated.

The naira appreciation followed increased dollar supply from willing
sellers, which include the banks, investors/exporters and the Central Bank
of Nigeria (CBN).

The daily foreign exchange market turnover rose by 57.91 percent to $198.13
million on Monday from $125.47 million recorded on Friday.

On June 14, 2023, the CBN abolished segments of the official FX market to
the I&E Window, where the "Willing buyer and Willing seller" was
re-introduced. Based on this adjustment, the official rate rose from
N463.38/$ to N768.17, the current rate.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar weaker after data burst, euro rises on ECB comments

(Reuters) - The dollar index retreated on Tuesday after a host of economic
data releases indicated the U.S. economy remains resilient and may not be
close to a recession, while the euro strengthened after comments from
European Central Bank (ECB) President Christine Lagarde.

The greenback retreated further after data showed new orders for
U.S.-manufactured capital goods unexpectedly rose in May, although the prior
month was revised down, indicating some caution remained among businesses
for new capital investment.

Durable goods

But the dollar pared declines somewhat after a separate reading on consumer
confidence from the Conference Board showed its index rose to 109.7 in June,
the highest since January 2022, from 102.5 in the prior month.

Additional data on single-family new home sales in May and home prices in
April also indicated the housing market has been able to weather rising
interest rates from the U.S. Federal Reserve.

"The problem is there's no indication that a recession is coming, you don't
see it in any of the statistics, what you have is a historical paradigm
where when the Fed raises rates at this speed and to this extent you get a
recession," said Joseph Trevisani, senior analyst at FXStreet.com.

"That's the model everyone's looking at - models don't always work, you
know."

The dollar index fell 0.234% at 102.490. The Japanese yen weakened 0.36%
versus the greenback at 144.02 per dollar after softening to as much as
144.02, its weakest since Nov. 10 as investors eyed a possible intervention
by the Bank of Japan (BOJ), which last intervened in the yen when it traded
around 145 per dollar.

Morgan Stanley said on Tuesday it was now expecting the Fed to hike its key
interest rate by 25 basis points in July, from an earlier estimate of a
pause, raising its terminal rate forecast to 5.375%.

Earlier on Tuesday, Japan's Finance Minister Shunichi Suzuki warned of a
response should the currency continue to depreciate.

The Japanese currency has come under pressure as the Bank of Japan has
maintained its soft monetary policy, while central banks around the globe
have embarked on a rapid path of hiking interest rates to combat stubbornly
high inflation.

The euro was up 0.49% to $1.0957 after climbing to $1.0976, the highest
since June 22, after comments from ECB officials.

Lagarde said inflation in the euro zone had entered a new phase that could
linger for some time, and "it is unlikely that in the near future the
central bank will be able to state with full confidence that the peak rates
have been reached".

Other ECB policymakers weren't anticipating clear evidence

inflation is easing enough that would enable the central bank to pause their
interest rate hikes.

The euro rose 0.84% against the yen at 157.830. Sterling was last trading at
$1.2745, up 0.26% on the day.

Federal Reserve Chair Jerome Powell, Bank of England governor Andrew Bailey,
and Bank of Japan Governor Kazuo Ueda are scheduled to speak at a panel with
Lagarde on Wednesday.

The Russian rouble weakened 1.24% versus the greenback at 85.47 per dollar
and was on pace for a fourth straight session of declines after touching its
weakest level since March 2022 on Monday.

Russian mercenary leader Yevgeny Prigozhin arrived in Belarus under a deal
that ended a brief mutiny against the Russian military by his fighters,
while President Vladimir Putin praised his armed forces for preventing a
civil war.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Drags on as Fed Rate Risk Lingers

The back-and-forth market that has defined 2023 for precious metals has
continued through the end of the first half of the year. Gold prices, which
had gained as much as 14.2% at their highs in early May, have slumped
considerably over the past several weeks, falling 7.32% from their highs.
The shift in focus away from the U.S. debt ceiling and potential default to
the Federal Reserve's ongoing efforts to defeat inflation has dramatically
altered the underlying narratives helping drive price action in gold and
related assets.

Gold prices under pressure as two-year notes weaken

In 2023, gold prices have proved sensitive to shifts in interest rates. The
one-month rolling correlation between /GC and /ZT is currently +0.71, but
has spent many weeks this year when the correlation has been above +0.8. In
fact, /GC and /ZT have moved in the same direction 67.5% of all trading days
in 2023:

gc/zt scatterplot chart

In a world where the Federal Reserve is keeping interest rates higher longer
and the prospect for additional rate hikes persists, it's difficult to
envision an environment whereby /ZT is able to sustain a significant rally
and to this end, for /GC to trade meaningfully higher in the near term
before the July Federal Open Market Committee (FOMC) meeting (set to
conclude Wednesday, July 26). Fed rate risk will need to be alleviated-or
the market's focus will need to shift away from the Fed-for /GC to reverse
course.

Consistent with the fundamental view, the technical remains bearish. Gold
prices are still below their 5-, 8-, 13- and 21- day exponential moving
averages (EMAs) and the EMA envelope is in bearish sequential order. Daily
moving average convergence/divergence (MACD) is trending lower below its
signal line. Daily slow stochastics are holding in oversold territory. The
uptrend from the November 2022 and March 2023 lows has been broken, while
the 1,950-2,000 range in /GCQ3 has broken to the downside. A return to the
March lows below 1,900 can't be ruled out in the near term.

Gold miners likely to struggle alongside gold prices

The weakness in /GC has spilled over to related equities. The VanEck Gold
Miners Exchange-Traded Fund, which had gained as much as 26.5% at its yearly
high, is now up by a mere 4.92% in 2023. The sharp reversal, a 17.06%
decline from the May high, reinforces the view that the precious metals
space is facing difficulties across the board. /GC and GDX have retained a
tight one-month rolling correlation this year, holding above 0.6 since the
start of the year:

While correlation does not speak to causation, it stands to reason the
impact is flowing from /GC to GDX; that is, GDX will not be able to trade
higher until the underlying commodity does.

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
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for guideline purposes only and sourced from third parties.

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