Bulls n Bears Daily Market Commentary : 16 May 2023

Wed May 17 06:34:15 CAT 2023

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Bulls n Bears Daily Market Commentary : 16 May 2023

ZSE commentary

ZSE in the black as bulls rage.

The ZSE closed the day in the black as bulls raged on the market  with the
All-Share Index putting on 9.50% to close at 74,913.15pts while, the Blue
chip Index garnered 11.34% to close at 46,407.04pts buoyed by gains in
SeedCo and Econet. The ZSE Agriculture Index gained 1.95% to settle at
252.81pts while, the Mid Cap Index extended prior session gains by 3.24% to
close at 130,738.61pts. Headlining the gainers' list of the day was SeedCo
Limited that edged up 14.99% to $340.2000 while, digital group Zimpapers
inched up 14.94% to settle at $7.5400. Property concern First Mutual notched
up 14.92% to settle at $44.3000 while, Econet continued to enjoy the rising
tide as it firmed 14.87% to close at a VWAP of $562.1150. Sugar processor
Star Africa ticked up 14.81% to settle at $2.3501.

Cigarette manufacturer BAT led the laggards of the day as it plunged 6.91%
to settle at $5,855.5528 while, roofing supplier Turnall dwindled 3.49% to
$8.2965. Proplastics parred 0.25% to close at $249.3848 as it capped the
worst performers' list of the day. Activity aggregates improved during the
session as demand

continued to increase across the market. Volume of shares traded surged
392.71% to see 7.54m share trade while, turnover ballooned by 2086.63% to
$4.29bn. Econet was the mostsought-afterstock during the session as it
claimed 56.82% of the volume and 56.02% of the turnover. Other volume
leaders of the day were OKZim and Delta that contributed a combined 24.29%
of the aggregate. Delta contributed 35.41% of the turnover traded. In the
ETF category, four of the five listed ETF's recorded double digit gains in
the session. Morgan & Co MCS and Old Mutual Top 10 ETF were the major
gainers in the session as they added 13.75% and 13.28% respectively. The
Tigere ETF was 14.87% up at $58.1485 on 13,960 units.

efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand dips after unemployment data, turbulent market

(Reuters) - South Africa's rand weakened on Tuesday, after data released
earlier in the day showed a rise in first-quarter unemployment figures,
providing a steer on the health of the local economy after a week of market
turbulence.

At 1515 GMT the rand traded at 19.0900 against the dollar , about 0.34%
weaker than Monday's close.

Statistics South Africa on Tuesday released the country's unemployment
figures for the January-March period which showed a rise in unemployment to
32.9%, up from 32.7% in the previous quarter (ZAUNR=ECI), (ZAUEMP=ECI).

The rand was pummelled last week, reaching a record low against the backdrop
of power cuts that show no sign of abating and claims that South Africa had
provided arms to Russia.

Struggling state power utility Eskom is implementing the worst rolling
blackouts on record, leaving businesses and households in the dark for up to
10 hours a day.

The blackouts are crippling the economy, with JP Morgan predicting that
South African economic output would contract this year by 0.2% as a result.

Shares on the Johannesburg Stock Exchange ended the day down, with both the
blue-chip Top-40 index (.JTOPI) and the broader all-share index (.JALSH)
closing around 0.4% lower.

South Africa's benchmark 2030 government bond marginally weaker, with the
yield up 1 basis points at 10.755%.

Nigeria

Naira at inflection point, consolidates around N740/$ for six months

Naira has consolidated at a narrow range - between 730-N750/$ - at the
parallel market for upward of six months. It is about the longest stretch
the local currency has traded without major volatility (a measure of the
extent of deviation from the average) in recent years.

Until towards the end of last year, naira traded at a wide swing with each
week setting a new price range and the rate changing thrice during some
trading sessions.

At the height of the exchange rate crisis, dollar spiked to N880/$. The
Guardian reported that whereas politicians were mopping the market to
prosecute their political ambitions, speculators had turned the currency
into an article of trade.

But the local currency has gained stability as the year-end approached,
marking the end of the high volatility witnessed in the past few years.

Since then, the currency has been cooling, trading at N730-750 in what could
be interesting as an inflection point, a curve at which a change of
direction is necessary.

Whereas it may be difficult to guess when to expect a clearer market
direction (whether naira would gain or lose against a basket of other
currencies), the biggest factor that may trigger a change is how the market
perceives the next administration in the first few days in office.

Announcing fuel subsidy removal, for instance, could send a strong signal of
an administration that is open to bold economic and market reforms. From
Nigerian experts to international fronts, there have been calls on the
administration to take courageous decisions that would unlock the potential
and set the pace for pro-market reforms.

In the past eight years, President Muhammadu Buhari has not taken a firm
position on the controversial subsidy payment even though it admitted that
it is a major drain on public resources. With about two weeks to the end of
the last and second tenure, Buhari is counting on his successor to bite the
bullet and do away with the social safety net on June 1.

The World Bank, International Monetary Fund (IMF) and other development
partners whose impressions go a long way in influencing the international
investment market are on the wing watching to see how the President-elect,
Bola Tinubu handles the issue next month.

If he makes a good impression, the much-needed foreign capital that would
stabilise the troubled currency could start pouring in again. That would
imply a much-stronger naira.

In the past four years, capital inflow has been on a reducing balance. From
2019, when the mandate of the outgoing President, Muhammadu Buhari, was
renewed till last year, capital inflow to Nigeria dipped by 78 per cent.
>From a record-high of $24 billion, Nigeria received a total inflow of $5.3
billion last year.

Whereas the restrictive global monetary framework is partly blamed for the
steep fall, some experts also attribute the shortfall to the rigidity of the
foreign exchange (FX) market, insecurity, inconsistent policies among
others.

Tinubu came in on the mantra of 'Renewed Hope'. He committed to subsidy
removal, market reform, growth of the private sector and liberalisation,
which experts believed, could be game changers if implemented.

But the market has not started pricing in the subsidy removal yet,
suggesting that market makers are still uncertain about the near-term
outlook, leaving naira to continue to struggle to find a new path.

If the currency breaks the N750/$ resistant point, analysts forecast, the
currency could dip into the N800-N900 range. But historical data do not
support a breakdown, at least not in the near term.

After the 1999 transition to civil rule, the naira steadied against the
dollar at N22/$ for a while before it lost hold. A similar trend played out
after the 2007 transition. Then, the local currency even gained value,
rising from over N120/$ prior to the election to N115/$ until towards the
end of 2018.

When Buhari took up the reins of government in 2015. The path to what later
turned out to be one of the steepest falls of the currency was gradual. A
few months after Buhari's inauguration, naira held steadily against its
pairs.

If the trend continues, the current stability in the parallel market,
especially, could continue in the next few months before naira eventually
finds a new path.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar drifts higher as US debt ceiling in spotlight

(Reuters) - The dollar edged higher on Tuesday in choppy trading, with no
clear direction, as investors kept an eye on debt ceiling talks to avert a
possible default that could reverberate across asset markets and damage
confidence in the world's largest economy.

The dollar index, a measure of the greenback's value against six major
currencies, was up 0.2% on the day at 102.61 . Against the yen, the
greenback rose 0.2% to 136.315 yen

Democratic President Joe Biden and top congressional Republican Kevin
McCarthy's U.S. debt ceiling negotiations ended on Tuesday after less than
an hour, as the looming fear of an unprecedented American debt default
prompted Biden to cut short an upcoming Asia trip. But the meeting ended on
an upbeat and unexpected note as McCarthy, coming out of the meeting with
Biden and other congressional leaders, said, "It is possible to get a deal
by the end of the week."

Both parties agree on the need for urgent action.

"Clearly, to the extent that there is a default risk, it would be chaotic.
The question is in a default, can you have Treasuries as collateral in a
world that's highly levered?" said Axel Merk, president and chief investment
officer at Merk Investments in Palo Alto, California.

Historically speaking, the U.S. dollar tends to rally in times when there is
financial stress and in periods of deleveraging as investors scramble to
unwind risky bets.

"But you don't want Treasury bills," Merk said. "So it's very difficult to
suggest that we would have a dollar rally in that deleveraging. I would say
it's very hard to predict what will happen other than volatility might be
dramatic."

In afternoon trading, the euro slipped 0.1% versus the dollar to $1.0858 ,
while sterling fell 0.4% to $1.2478 .

The dollar earlier rose after U.S. retail sales rose less than expected in
April, but details showed that the underlying trend remained solid. This
suggested that consumer spending likely remained strong early in the second
quarter.

Retail sales rose 0.4% last month. Data for March was revised slightly lower
to show sales dropping 0.7% instead of 0.6% as previously reported.

In line with the generally upbeat economic picture, industrial production
jumped 1% in April, easily topping expectations for a flat reading and up
slightly from the revised 0.8% increase in March.

The reports suggested that while the market widely expects the Federal
Reserve to pause increasing rates at the next meeting, a hike in borrowing
costs was not off the table.

"While there were some mixed signals in today's various data reports, on net
most were favorable and early in the quarter we're continuing to track some
upside risk to our 1.0% 1Q GDP growth projection," wrote Michael Feroli,
chief U.S. economist at J.P. Morgan, in a research note.

"Even so, given all the dark clouds on the horizon, we continue to see the
Fed on hold at the next meeting in mid-June."

Richmond Federal Reserve President Thomas Barkin on Tuesday doubled down
though on the higher-for-longer mantra. He said he likes the "optionality"
implied in the central bank's latest policy statement, but he is
"comfortable" with raising interest rates further if that is what is needed
to lower inflation.

That has been the message from several Fed officials over the last week.

========================================================

Currency bid prices at 3:54PM (1954 GMT)

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices steady with focus on US debt-ceiling talks

Gold prices remained stable during early Asian trade after dropping below
the crucial $2,000-per-ounce level in the previous session, with investors
keeping a watchful eye on developments in the U.S. debt ceiling
negotiations. U.S. retail sales in April demonstrated slower-than-expected
growth, while the Atlanta Fed's president, Raphael Bostic, expressed caution
about inflation levels. Meanwhile, the greenback dollar index maintained its
strength, and SPDR Gold Trust GLD's holdings increased slightly.

Gold prices held steady in early Asian trade on Wednesday after retreating
from the key $2,000-an-ounce mark in the previous session, while investors
kept their eyes peeled for an outcome from the U.S. debt-limit negotiations.

* Spot gold held its ground at $1,992.19 per ounce by 0032 GMT. U.S. gold
futures edged 0.1% higher to $1,995.40.

* U.S. President Joe Biden and top congressional Republican Kevin McCarthy
edged closer to a deal to avoid a looming U.S. debt default, as the threat
of an economic nightmare prompted Biden to cut short an Asia trip this week.

* U.S. retail sales increased less than expected in April, but the
underlying trend was solid, suggesting that consumer spending likely
remained strong early in the second quarter, despite growing risks of a
recession this year.

* On the central bank front, Atlanta Fed president Raphael Bostic said on
Tuesday the U.S. Federal Reserve will need to stay "super strong" in
fighting inflation even if the unemployment rate starts to rise later in the
year,

* Traders are currently pricing in an 85% chance of the U.S. central bank
holding rates in June, according to the CME FedWatch tool.

* The dollar index, a measure of the greenback's value against six major
currencies, held firm.

* A stronger dollar weighs on overseas demand for greenback-priced gold,
while higher rates blunt non-yielding bullion's appeal.

* Meanwhile, Japan's economy grew an annualised 1.6% in January-March from
the previous quarter, as firm private consumption and an unexpected rise in
capital expenditure offset shrinking external demand, government data showed
on Wednesday.

* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund,
said its holdings rose 0.09% to 934.93 tonnes on Tuesday from 934.07 tonnes
on Monday.

* Spot silver was flat at $23.74 per ounce, while platinum rose 0.4% to
$1,061.43. Palladium fell 0.1% to $1,499.84.

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
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opinions expressed and recommendations made are subject to change without
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