Bulls n Bears Daily Market Commentary : 29 June 2023

Fri Jun 30 06:03:43 CAT 2023

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Bulls n Bears Daily Market Commentary : 29 June 2023

ZSE commentary

Zimbabwe Stock Exchange (ZSE) 

The overall Market Cap for today closed at ZWL14,026.93 trillion with a
percentage drop of 0.75%. Total turnover also dropped by 93.16% to close at
ZWL190 million, following a decrease of 80.06% in the total volumes traded
which later closed at ZWL560 thousand. Delta, Ok Zimbabwe and BAT Zimbabwe
were today's three most traded counters, constituting 73% of the total
turnover. 

The benchmark All-Share Index decreased by 0.65% to close with 171,911.16
points at the back of 16 raisers and 5 counters trading in the negative. The
Top 15 Index lost1.03% to 120,018.84 points with Top 10 Index also shedding
off 0.98% to close with 94,277.13 points. 

BAT Zimbabwe and Cafca  made the risers' list for the day after gaining
15.00% each to close at $13,467.75 and $1,765.70, respectively. First M.
Limited, Nmbz Holdings and Nampak Zimbabwe capped the list after adding
14.96%, 14.89% and 11.11% to close at $122.95, $216.00 and $70.00,
respectively. 

Trading on top of the decliners' list for today was CBZ Holdings, after
losing 15.00% to close at $2,486.85. Seed Co and Econet also traded in the
negative today after decreasing by 4.99% and 2.00% to close at $1,899.95 and
$881.48, respectively. Edgars Stores and Dairibord capped the list after
dropping by 0.92% and 0.45% to close at $108.95 and $465.45, respectively. 

Victoria Falls Stock Exchange (VFEX) 

The VFEX All Share Index lost 0.21% to close with 76.78 points..-Akribos
Securities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand weakens as US dollar firms, shares flat

(Reuters) - The South African rand weakened on Thursday as the U.S. dollar
firmed, bolstered by market expectations of more rate hikes.

At 1700 GMT, the rand traded at 18.7800 against the dollar , 0.63% weaker
than its previous close.

The dollar last traded at 103.29, around 0.3% stronger, against a basket of
global currencies.

The U.S. currency has been supported since Wednesday when Federal Reserve
Chairman Jerome Powell did not rule out more rate hikes.

On Thursday, the dollar index climbed to a two-week high after economic data
showed the labor market remained on a solid footing, giving the Federal
Reserve a possible cushion to continue raising interest rates.

South Africa's producer inflation (ZAPPI=ECI), (ZAPPIY=ECI) slowed to 7.3%
year on year in May from 8.6% in April, data showed on Thursday.

"We expect producer prices to moderate even further in the coming months,"
Nedbank analysts said in a research note.

"However, there is still a risk that inflation could recede at a
slower-than-anticipated pace."

Other data showed South Africa recorded a small foreign direct investment
inflow of 0.5 billion rand ($26.64 million) in the first quarter of 2023,
down from a revised inflow of 64.0 billion rand in the previous quarter.

On the stock market, the Top-40 (.JTOPI) and the broader all-share (.JALSH)
indexes closed almost unchanged.

South Africa's benchmark 2030 government bond was weaker, with the yield up
1.5 basis points to 10.495%.

($1 = 18.7691 rand)

Nigeria

Bank of America says naira now undervalued after float

The Nigerian naira has moved from being overvalued to undervalued following
the government's long-awaited foreign exchange reform, analysts at US-based
Bank of America said in a June 28 note to clients.

"We now see a USDNGN fair value of 680 per USD (previously 580). However,
USDNGN is likely to trade above this level, with year-end 700, and a return
to 650-680 in early 2024," the Bank of America (BOfA) analysts said.

Since Nigeria floated the naira on June 14, the currency has weakened by
over 60 percent compared to the N460 per USD level it traded before the
reform. On Tuesday, the currency closed at N780 per USD, according to FMDQ
data.

The Bank of America's fair value estimate of N680 means the naira is now 12
percent undervalued.

"The caution is transition time, aligning rates and still to unlock more USD
into the formal market will take some time. When the dust has settled, the
value of the naira should be stronger and appreciating," the analysts added.

According to Bank of America, higher oil exports ($12 billion more) and a
liberalised import regime ($10 billion increase in non-oil imports) can
still result in consistent current account surpluses over the medium term
which will boost dollar inflows required to support the naira.

Read also: Tinubu's next big move is fighting crude theft, says Bank of
America

"An addition of $12-13 billion on export revenues from higher oil production
is moderated by a liberalised imports regime that could add $10 billion as
non-oil imports increase. Still a net gain of $2-3billion that strengthens
the current account surplus," the BOfA analysts said.

On June 13, Nigeria decided to float the naira, a marked departure from
years of a currency peg that spooked foreign investors and hurt the economy.

Standard Chartered Bank is also of the view that the naira is undervalued
following the float and expects the currency to strengthen to N685 per US
dollar as Nigeria quickens the pace of implementing reforms needed to fix
its foreign exchange market.

"We now forecast USD-NGN at 685.00 at the end Q2-2023 (from 480 previously),
rising to 720 in Q3-2023 (520 prior), before appreciating thereafter as the
market stabilises," Razia Khan, head of research, Africa & Middle East and
Samir Gadio, head of Africa strategy both at Standard Chartered bank said in
a June 14 note to investors.

Nigeria's bold move towards achieving a unified exchange rate after years of
a multiple exchange rate practice drew the criticism of economists is the
latest of a list of reforms by new President Bola Tinubu who has also
scrapped a costly petrol subsidy program.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar index hits two-week high as data boosts Fed hike expectations

(Reuters) - The U.S. dollar index climbed to a two-week high on Thursday
after economic data showed the labor market remained on a solid footing,
giving the Federal Reserve a possible cushion to continue raising interest
rates.

Weekly initial jobless claims decreased 26,000 to a seasonally adjusted
239,000, the largest drop in 20 months and below the expectation of 265,000
by economists polled by Reuters.

In addition, the Commerce Department revised its first-quarter gross
domestic product estimate to 2%, up from the 1.3% reported in May and above
the 1.4% previous estimate.

Fed Chair Jerome Powell, at an event held by the Spanish central bank in
Madrid on Thursday, indicated the central bank is likely to resume their
rate hike path after a pause earlier this month.

"For now, the economy remains resilient in the face of all the tightening
we've seen, and suggests the Fed and others will have to keep going," said
Huw Roberts, head of analytics at Quant Insight.

On Wednesday, Powell said at a European Central Bank meeting of central
bankers he did not see inflation getting back to the Fed's 2% until at least
2025.

In addition, Atlanta Federal Reserve President Raphael Bostic said on
Thursday the Fed will have to increase rates if price growth moves away from
target, or inflation expectations start to move in "a difficult way."

Other central bank heads at the meeting, including ECB President Christine
Lagarde and Bank of England Governor Andrew Bailey, also supported more rate
hikes, with the exception of Bank of Japan (BOJ) chief Kazuo Ueda.

Earlier data in Europe showed German inflation rose more than expected in
June, ending a steady decline since the beginning of the year, while
inflation in Spain and Italy eased.

"The latest numbers ... point to sticky inflation, at least at the core
level if not the headline level, and that was true in Europe too," said
Roberts. "Look at the Spanish core inflation, and German too - that speaks
to central banks still being in play."

Quarter and month-end positioning by investors may also be affecting price
action, he added.

The dollar index rose 0.35% at 103.310 after climbing to 103.44, its highest
level since June 13.

Reuters Graphics

Market expectations for a 25 basis-point hike by the Fed at its July meeting
rose to 86.8% from 81.8% in the prior session, according to CME's FedWatch
Tool, and completely rule out a rate cut this year.

The dollar strengthened against the Japanese yen for a third straight day,
hitting a fresh 7-1/2 month high of 144.90, as U.S. and Japanese central
bank policy plans are expected to remain at opposite ends of the spectrum.

The yen weakened 0.23% versus the greenback to 144.83 per dollar. Investors
are watching to see if the BOJ will intervene in the currency again, which
last happened at around the 145 mark.

Reuters Graphics

Sweden's crown hit a record low of 11.8502 against the euro after the
Riksbank modestly raised its policy rate and increased the pace of its bond
sales.

The Swedish crown was last down 0.35% at 11.81 per euro.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold stabilizes after strong US data drags bullion below $1,900/oz

Gold regained some ground on Thursday as traders took advantage of a brief
dip below the key psychological $1,900 level that was driven by a volley of
robust U.S. economic readings.

Spot gold edged up 0.1% at $1,908.4 per ounce by 1:52 p.m. EDT (1752 GMT).
U.S. gold futures settled 0.2% lower at $1,917.90.

Prices fell under $1,900 for the first time since mid-March after the data
as the dollar index firmed 0.4%, making bullion less attractive for overseas
buyers. Benchmark 10-year Treasury yields rose.

"We've seen prices move down from $2,000 to $1,900 and that in itself is
going to bring about some bargain hunting," said David Meger, director of
metals trading at High Ridge Futures.

U.S. jobless claims fell last week by the most in 20 months, pointing to
labor market strength that also helped prop up gross domestic product in the
first quarter.

"It was a one-two punch taking gold another leg lower ... and then the
hawkish central banks haven't helped out at all," said Phillip Streible,
chief market strategist at Blue Line Futures in Chicago.

Federal Reserve Chair Jerome Powell said most of the central bank's
policymakers expect they would need to raise interest rates at least twice
more by year-end with U.S. inflation well above the 2% goal and a labor
market that's still very tight.

While gold is considered an inflation hedge, rising rates dull non-yielding
bullion's appeal, with current rate expectations putting it on course to end
the quarter in negative territory for the first time since September 2022.

Traders awaited May's personal consumption expenditure data, the Fed's
favored inflation gauge, on Friday.

Silver fell 0.6% to $22.59 per ounce, while platinum dropped 1.6% to
$896.55, an eight-month low.

Palladium dipped 1.6% to $1,228.50, hovering near its lowest since December
2018.

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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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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