Bulls n Bears Daily Market Commentary : 17 May 2023

Thu May 18 05:56:29 CAT 2023

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Bulls n Bears Daily Market Commentary : 17 May 2023

ZSE commentary

Bullish sentiment continues.

The bullish sentiment continued in the midweek session to see the primary
All Share Index climbing a further 5.32% to 78898.82pts while, the Blue-Chip
Index rose 5.53% to 48973.39pts. The Agriculture Index surged 8.98% to
275.52pts while, the Mid Cap Index gained 4.57% to 136717.91pts. The trio of
Dairibord, First Mutual Holdings and Truworths led the gainers of the day on
an identical 15.00% jump to end pegged at $213.9000, $28.7500 and $5.0600
respectively. Seed producers Seed Co Limited advanced 14.99% to $391.2000
while, Ok Zimbabwe limited capped the top five winners' pack on a 14.83%
uplift to close at $140.4969. Headlining the laggards of the day was
cigarette manufacturer BAT that tumbled 7.48% to $5,417.5000 while, CFI
Holdings retreated 6.53% to $705.9196. Mash Holdings completed the fallers'
set on a 0.25% decline to settle at $22.0000. The market closed with a
positive breadth of twenty-one as twenty-four counters recorded gains
against three that lost ground.

Activity aggregates were depressed in the session as the volumes traded
dropped 33.04% to 5.05m shares while, the value outturn succumbed 68.46% to
$1.35bn. OKZim, Star Africa, Econet and Delta were the top volume drivers of
the day as the quartet claimed a combined 78.22% of the aggregate. The top
value drivers of the day were Delta (36.73%), OKZIM (25.82%), Econet
(14.64%) and Meikles (9.75%). On the ETF market, Datvest and MIZ ticked up
0.97% and 11.72% to $4.8035 and $2.8007 accordingly. Morgan & Co MCS edged
up 13.39% to close the day at $41.5000 while, the Old Mutual Top 10 ETF
firmed up 5.09% to $14.9885. The Tigere REIT stepped up 14.92% to $66.8253
on 11,050 unitsefesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand drops after retail sales data, dollar gains

(Reuters) - South Africa's rand weakened on Wednesday after
worse-than-expected March retail sales data, and as the dollar hit a
six-week high.

At 1519 GMT, the rand traded at 19.2550 against the dollar , around 0.93%
weaker than its previous close.

On Wednesday, the dollar reached a high of 103.120 against a basket of
global currencies. It last traded at 102.950 as U.S. debt ceiling talks
continue.

Locally, Statistics South Africa data showed a 1.6% drop in year-on-year
retail sales (ZARET=ECI) in March. Analysts polled by Reuters predicted a
0.7% decline.

Sentiment also soured on local media reports of a further delay to
maintenance at the country's only nuclear power station, heightening fears
that an ongoing power crisis will deepen.

EE Business Intelligence reported that one of the Koeberg's plants reactors
currently offline for maintenance will be shut for a further 200 days.

The country faces its worst blackouts on record, leaving households and
businesses without power for up to 10 hours daily and crippling the economy.
JP Morgan predicts a 0.2% contraction of gross domestic product for 2023.

Last week, the rand hit an all-time low of 19.5100 against the dollar
following record power cuts and allegations that South Africa shipped
weapons for Russia.

South Africa's Eurobonds fell up to 1.7 cents in the dollar, with the 2052
maturity down 1.669 cents to 80.119 cents at 1531 GMT, according to Tradeweb
data .

"South Africa's Eurobonds are back on the defensive today," said Kieran
Siney of ETM Analytics.

"The news (of the Koeberg shutdown) has come as a fresh headwind ...
following the Russia saga and (the) worsening electricity crisis."

On the Johannesburg Stock Exchange the blue-chip Top-40 (.JTOPI) ended the
day 0.74% higher and the broader all-share index (.JALSH) closed 0.54% up.

The benchmark local 2030 government bond weakened, with the yield closing up
30 basis points at 11.055%.

Zambia

Kwacha fluctuations keeping prices of goods high - Haabazoka

ECONOMIST Lubinda Haabazoka says the consistent fluctuation of the Kwacha
has caused the increase of prices for goods and services in the country. The
prices of goods and services have continued to increase steadily despite
government's attempts to counter inflation and stabilise the country's
economy, with JCTR's latest report showing an increase in the cost of living
for a family of five in Lusaka from K9,003.21 in March to K9,112.6. In an
interview, Monday, Haabazoka said the Kwacha needed to be persistently
bullish for its appreciation to reflect in the reduction of prices for goods
and services. "For us to be able to see downward movement in prices, the
Kwacha needs to be bullish persistently, so it needs to be....

Nigeria

Naira falls to record low of N465.13 on rising dollar demand

Naira on Wednesday fell to N465.13 per dollar, the lowest ever at the
Investors and Exporters (I&E) forex window, Nigeria's official foreign
exchange (FX) market.

This represents a 0.11 percent lower than N464.58 per dollar quoted on
Tuesday at the I&E window, data from the FMDQ indicated.

The naira',s weakness followed increased demand for the dollar by the end
users for importation and travel allowances, traders said on Wednesday.

"There has not been so much money coming into the country," a Lagos based
analyst said, adding that what is happening in the United States could make
some other countries panic.

Data from the banking sector regulator showed that net total foreign
exchange inflow stood at $72.4 billion in 2022, representing a 23.3 per cent
decline compared to the $94.3 billion recorded in 2021 and also a 37.4 per
cent decline from $115.6 billion received in 2020..

Dollar closed at the rate of N747.50 at the parallel market on Wednesday,
following increased demand for the greenback by importers.

This showed a 0.20 percent drop in the value of the naira against the
dollar, when compared to N746 traded in the morning of the same day.

Following the outcome of the deliberations at the just concluded third
edition of the RT200 non-oil export bi-annual summit, the Central Bank of
Nigeria (CBN) said export of products in their raw form shall be eligible
for rebate.

The CBN said this in a circular dated May 10, 2023 and signed by Ozoemena
Nnaji, director, trade and exchange department, CBN.

The circular stated that a rebate of N25 for every dollar repatriated and
sold on the investors and exporters window for third party use shall apply,
while N15 for every USD$1 repatriated and sold on the I&E window for own use
shall apply, adding that the effective date for implementation is April 01,
2023.

The payment of the graduated rebate amounts is expected to encourage
exporters of primary products to enhance their capacity and eventually
engage in value added exports. All authorised dealers are to ensure strict
compliance, the Nnaji said in the circular.

Last year, Nigerian banks commenced a review of dollar request processing
time for school fees, upkeep and rent payment, following dollar shortages.
This according to the banks was due to limited foreign exchange availability
provided by the CBN.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar scales seven-week peak after solid data, debt-ceiling optimism

(Reuters) - The dollar rose to a seven-week high on Wednesday, boosted by
optimism about a deal to extend the debt ceiling and avert a U.S. default
and amid a round of solid economic data that suggests rate cuts from the
Federal Reserve could come later rather than sooner.

The dollar index, a measure of the greenback's value against six major
currencies, climbed as high as 103.12 , its strongest level since late
March. It was last up 0.3% at 102.85.

The euro, meanwhile, dropped to a six-week low versus the dollar at $1.0811
. It last changed hands at $1.0838, down 0.2%.

"We're seeing a few factors boost the U.S. dollar today," said Helen Given,
FX trader at Monex USA in Washington. "Progress on debt-ceiling talks,
stronger-than-expected economic data out of the U.S., and hawkish commentary
from a few Fed officials are all providing some strength."

President Joe Biden and top U.S. congressional Republican Kevin McCarthy on
Wednesday underscored their determination to reach a deal soon to raise the
federal government's $31.4 trillion debt ceiling and avoid an economically
catastrophic default.

After a months-long standoff, both political leaders agreed to negotiate a
deal directly. An agreement needs to be passed by both chambers of Congress
before the federal government runs out of money to pay bills, as soon as
June 1.

"The debt ceiling talks seem to be helping the dollar regardless of how they
appear to be going," said Joe Manimbo, senior market analyst at Convera in
Washington.

"On the one hand, a continued stalemate tends to lend a safe-haven boost to
the dollar. While on the other, any constructive tone in negotiations can
add to the dollar's renewed popularity."

U.S. data, meanwhile, has been on the whole positive, despite some pockets
of slowdown, backing the view that interest rates will remain higher for
longer.

Wednesday's data showed U.S. single-family homebuilding increased in April,
although data for the prior month was revised sharply lower.

Single-family housing starts, which account for the bulk of homebuilding,
rose 1.6% to a seasonally adjusted annual rate of 846,000 units last month.
Data for March was revised down to show single-family starts falling to a
rate of 833,000 units instead of increasing to a pace of 861,000 units as
previously reported.

That followed reports on Tuesday that U.S. retail sales rose in April,
although less than expected, with the underlying trend remaining strong.

U.S. industrial production also gained, advancing 1% last month, easily
topping expectations and up slightly from the March reading.

"Recent data is painting a more resilient picture of U.S. growth compared to
Europe," said Manimbo. "Moreover, elevated inflation and low unemployment on
this side of the pond suggest any U.S. rate cuts are likely to materialize
later rather than sooner."

In afternoon trading, the dollar rose 0.9% versus the yen to 137.59 yen,
after earlier climbing to a two-week peak of 137.625 .

The rate futures market has priced in no chance of a Fed rate cut in June,
down from about a 17% probability seen a month ago.

Elsewhere, the Chinese yuan weakened past 7 per dollar on Wednesday for the
first time in five months amid geopolitical tensions and more signs of
China's post-COVID-19 recovery losing steam.

In the offshore market, the dollar rose 0.1% against the yuan to 7.0077 .

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price weighed down by Fed hawkish comments

Gold prices retreated further on Wednesday as the dollar advanced after
comments from US Federal Reserve officials cast doubts over interest rate
cuts this year.

Spot gold was down another 0.3% to $1,981.95 per ounce by 12:40 p.m. EDT,
after falling below $2,000 the previous session. US gold futures fell 0.4%
to $1,985.60 per ounce.

Meanwhile, the US dollar index hit a six-week high, eroding appeal for
bullion, which also competes with the currency as a safe-haven, especially
among overseas buyers.

The dollar's jump, in part driven by Fed officials generally "leaning
hawkish overall," has been weighing on the metals markets, said Jim Wyckoff,
senior analyst at Kitco Metals, in a note to Reuters.

While a US debt default could be bullish for gold, most of the marketplace
does not seem to think that could happen, Wyckoff added.

Reiterating the central bank's resolve to rein in inflation, Chicago Fed
President Austan Goolsbee said it was "far too premature to be talking about
rate cuts", while Cleveland Fed President Loretta Mester said rates were not
yet at a point where the bank could hold steady.

A Reuters poll saw the Fed holding rates steady this year. Traders are
pricing in an around 75% chance of the Fed standing pat on rates in June,
with cuts still expected late in the second half of the year, per Fed Fund
Futures.

"We still look for higher prices over the next 12 months, with gold expected
to reach $2,200/oz, but the next uptick in prices is likely to happen when
the Fed's tone is shifting to more dovish," said UBS analyst Giovanni
Staunovo.

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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