Bulls n Bears Daily Market Commentary : 11 May 2023

Thu May 11 23:13:52 CAT 2023

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Bulls n Bears Daily Market Commentary : 11 May 2023

ZSE commentary

ZSE rebounds in Thursday’s session

The market recovered from prior session’s losses as the four indices we
review closed in the black. The ZSE All-Share Index rebounded 1.11% to close
pegged at 59,538.57pts while, the Blue-Chip Index eked out a 0.67% gain to
settle at 35,813.01pts. The Agriculture Index closed 2.06% higher at
227.09pts while, the Mid-Cap Index added 2.59% to settle 114,893.40pts.
Agriculture concern Zimplow continued to enjoy the rising tide, post
announcement of its cautionary relating to migration to the VFEX as it
notched up 14.94% to $63.8000. Trailing was property concern First Mutual
that posted a 11.09% growth to settle at $34.9521. Retailer OK Zimbabwe
inched up 10.92% to $98.0699 while, TSL firmed up 10.78% to close at
$150.0000. Seed manufacturer SeedCo Limited capped the top five gainers’
list of the day as it edged

up 10.14% to close at a VWAP of $253.0162. Leading the laggards of the day
was Meikles that trimmed 1.87% to close pegged at $590.5310, followed by
sugar producer Star Africa that eased 0.17% to $2.3960.

Activity aggregates were depressed in the session as reflected by volumes
that declined 95.61% and value outturn which tumbled 55.33%. A total of
2.37m shares traded on the market driven by Ok Zimbabwe, Tanganda and
Ecocash that contributed a combined 56.01% of the aggregate. The trio of
Hippo Valley, Tanganda and Delta were the value leaders of the day with
respective contributions of 28.33%, 24.44% and 21.97% apiece. A total value
of $850.08m exchanged hands in the session. The ETF Index advanced 4.88% to
557.27pts buoyed by gains in Old Mutual Top 10 and Datvest MCS that rose
14.83% and 7.20% apiece. The Tigere REIT was stable at $50.6199 as 38,999
units exchanged hands..efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

Nigeria

Nigeria's naira hits record low after central bank adjusts spot rate

(Reuters) - The Nigerian naira hit a record low of 466 per dollar on the
official market on Thursday, after the central bank weakened the currency on
the spot market and at its foreign exchange auction as it tries to address a
backlog of demand for foreign currency, traders said.

Nigeria's central bank has been adjusting rates to manage demand for foreign
currency against its level of foreign reserves while at the same time
intervening on the foreign exchange market to keep the currency stable after
it has weakened.

The central bank adjusted rates on Wednesday to 465 naira from 460 naira per
dollar, traders said, while it sold hard currency to businesses for raw
materials and other imports at 630 naira at its last auction on Friday.

"Generally, the market impression is that (FX) rates are moving up," one
currency trader said.

The naira, which trades within a range on the official market, has fallen to
successive lows due to dollar scarcity, coupled with the central bank's
adjustments to manage the backlog of demand for foreign exchange.

The currency later recovered some ground to trade at 463 naira per dollar on
the official market on Thursday.

"At the current level, clients are not getting funds," the trader said. "The
appetite is to seek more dollars to meet obligations."

The naira eased to 748 against the dollar on the black market as individuals
and firms channel unmet currency demand to informal sources.

South Africa

South African rand hit by 'perfect storm' as sell-off escalates

(Reuters) - A sell-off in the South African rand and bonds gathered pace on
Thursday, as news reports that South Africa had provided arms to Russia
spooked investors already concerned about the economic impact of crippling
power cuts.

The rand touched a low of 19.3250 against the dollar, down as much as 2.4%
on the day and hitting its weakest since the record low set on April 6,
2020, early in the COVID-19 pandemic.

By 1553 GMT the rand had pared some of its losses to trade around 1.6%
weaker than its previous close.

"Today will go down as a historic day for the (rand) as the perfect storm
hit," Kieran Siney of ETM Analytics said in emailed comments, citing news
reports about the alleged arms shipment to Russia, intensifying concerns
over power outages and dovish comments from a central bank deputy governor.

Local news website News24 cited the U.S. ambassador to South Africa as
saying that Washington was confident that a cargo ship that docked near Cape
Town in December had loaded weapons and ammunition before the ship went back
to Russia.

Traders and analysts said they were concerned that South Africa could face
Western sanctions if it was found to have supplied Russia with weapons while
Moscow was waging war in Ukraine.

Asked by an opposition lawmaker in parliament about the News24 report, South
African President Cyril Ramaphosa said: "The matter is being looked into."

Asked about the power crisis which sees many South African households and
businesses go without electricity for more than 10 hours a day, Ramaphosa
rejected a lawmaker's suggestion that his government had failed to address
the issue.

Experts predict longer outages deeper into the southern hemisphere winter.

"Foreign investors are worried that our economy will be badly affected by
the load-shedding," said Greg Davies, head of wealth at Cratos Capital,
using a term for power cuts.

"It's getting bad now because we need to buy dollars to pay for diesel and
that will be getting much more expensive with the rand now being so weak to
the dollar."

Shares on the Johannesburg Stock Exchange also tumbled, with the blue-chip
index (.JTOPI) ending the day down around 1%.

South Africa's sovereign dollar bonds fell as much as 2.6 cents in the
dollar. Longer-dated maturities fell the most, with the Eurobond maturing in
2047 down as much as 2.645 cents in the dollar .

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar stronger as market rethinks monetary policy outlook

(Reuters) - The U.S. dollar rose against the euro and sterling on Thursday
and set a more than one-week high against a basket of its major peers as
traders sought safety after a series of economic data prompted a
reassessment of their outlook for global monetary policy.

The number of Americans filing new claims for unemployment benefits jumped
to a 1-1/2-year high last week, pointing to cracks in the labor market as
demand slows, potentially giving the Federal Reserve room to halt further
interest rate increases next month.

U.S. producer prices, on the other hand, showed a moderate rise last month,
posting the smallest annual increase in producer inflation in more than two
years, further evidence that inflation pressures were easing.

The producer price index for final demand rose 0.2% last month. In the 12
months through April, the PPI increased 2.3%. That was the smallest
year-on-year rise since January 2021 and followed a 2.7% advance in March.

"I think the market is starting to rethink the outlook for the Fed cutting
rates after inflation, while lower, remained on the high side. The dollar
stands to gain if markets pull rate cuts off the table, a scenario that
would allow it to retain its yield advantage for longer," said Joe Manimbo,
senior market analyst, at Convera in Washington.

"After the ECB and the Bank of England, you start to get the sense that any
further rate hikes from Europe might be more modest in scope than previously
thought. If some people are questioning the Fed cutting rates, and at the
same time the market sees less upside for interest rates abroad, that helps
to level the playing field when it comes to foreign exchange."

The dollar index , which tracks the U.S. currency against six major peers,
rose 0.7% to 102.06, its highest showing in more than a week.

Sterling , fell to a one-week low of $1.2497, down 0.9% in afternoon
trading, while the euro fell to a one-month low at $1.09, or down 0.6%.

U.S. data followed earlier release from China showing more evidence of
weakness in its post-COVID recovery.

"The Chinese data overnight was a little surprising. And if you couple that
with the reopening hype that's been going on for a few months, let's be
honest, it just really hasn't happened," said Erik Bregar, director of FX &
precious metals risk management at Silver Gold Bull in Toronto. "So, it just
felt like a reaction to take off risk more broadly...Let's buy the dollar.
Put on some safer bets, or unwind some of the riskier bets."

Fed funds futures traders are still pricing in a pause before expected rate
cuts in September. The Fed's target range stands at 5% to 5.25%. ,

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price is heading for all-time high: Here’s why that should terrify
everyone

Victoria Scholar's advice on how to survive a stock market crash

Investors can’t get enough of gold right now. Nor can central bankers. As
global stock markets wobble, banks go bust and house prices crash, people
are doing what they always do in tough times.

They’re loading up on gold bars, coins and jewellery.

The gold price is closing in on its all-time record high as investors run
scared of today’s multiple global political and economic storms.

At time of writing this, the precious metal trades at $2,031.28 (£1,611) an
ounce.

That’s just 2.1 percent below its all-time high of $2,074.88, which it hit
in August 2020 at the height of the Covid pandemic.

Gold has been a store of value for more than 4,000 years. The yellow metal,
as investors call it, has little practical value but it does offer security.

Yet history shows gold can also be highly volatile and unpredictable. Last
year, the gold price crashed despite war in Ukraine, thte energy shock,
continuing Covid lockdowns in China and recession fears.

So why did the metal lose its lustre?

The big disadvantage of holding gold is that it doesn't pay any interest or
dividends, in contrast to cash, bonds and shares.

That wasn't a major problem in the years after the financial crisis, when
central banks slashed interest rates almost to zero and savings rates and
bond yields crashed.

But last year interest rates rocketed as central bankers battled inflation,
and suddenly cash and bonds were paying income of more than four percent a
year.

There is another reason gold failed to shine in 2022.

Gold-price-soars

The gold price can be volatile for a supposed safe haven (Image: Getty)

The precious metal is priced in US dollars, and last year the greenback was
the best performing asset class of all.

The mighty dollar replaced gold as the world’s number one safe haven as
investors earned higher interest from US government bonds.

Dollar strength made gold more expensive for buyers in other currencies,
hitting key sources of demand such as China and India.

Despite the recent dip, gold has been a dazzling investment in our troubled
millennium. The dot-com crash, September 11 terror attacks, financial
crisis, Covid pandemic and war in Ukraine have all menaced investors.

The gold price has soared by 475 percent over the last 20 years, making it
one of the best investments of the 21st century. 

It has performed well lately, too, rising more than 15 percent in the last
six months as troubles mount.

Adrian Ash, director of research at BullionVault, reports a doubling in the
numbers of gold buyers following the banking scare. “Today’s sky-high prices
have also spurred record profit-taking.”

Gold should continue to dazzle as central banks in China, Qatar, Turkey and
elsewhere build up their reserves.

Investors are also keen buyers. “The metal is working just as they hoped,
spreading risk and offering a profit to offset losses elsewhere,” Ash said.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Africa Day

May 25

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 sec of more established companies. Neither Faith Capital nor any other
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for guideline purposes only and sourced from third parties.

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