Bulls n Bears Daily Market Commentary : 22 May 2023

Tue May 23 02:48:32 CAT 2023

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Bulls n Bears Daily Market Commentary : 22 May 2023

ZSE commentary

ZSE remain firm in week-opener…

The market firmed in week-opener as the primary All Share Index put on 1.73%
to end at 84655.77pts while, the Blue-Chip Index added 1.08% to 51656.83pts.
The ZSE Agriculture Index grew 2.11% to close at 304.93pts while, the
Mid-Cap Index went up 4.05% to 155927.55pts. Leading the winners of the day
was the duo of Proplastics and Dairibord that surged a similar  15.00% to
close at $344.9999 and $276.5500 apiece. Financial services group ZB
garnered 14.97% to $138.0500 as apparel retailer Edgars trailed on a 14.90%
uplift to $50.8448.

Mashonaland Holdings completed the top five winners of the day on a 14.77%
jump to $33.3396. Partially offsetting today’ gains were losses in Ecocash
that dipped 10.59% to $133.9805. Zimplow dropped 1.09% to trade at $95.0000
as Tanganda shed 0.82% to $746.4546. Cigarette manufacturer BAT slipped
0.21% to $5406.2500 as RTG lost 0.19% to $44.2500. Activity aggregates were
subdued in Monday’s session as volumes traded succumbed 78.38% to 4.98m
shares while, turnover declined 21.57% to $2.12bn. Volume leaders of the day
were Tanganda, Ecocash, Star Africa and Delta that claimed a combined 66.57%
of the aggregate. Delta, BAT and Tanganda accounted for 33.69%, 24.32% and
22.21% of the value aggregate apiece. MIZ notched 8.61% to $3.2797 while,
the Old Mutual ETF rallied 3.05% to $17.0350. Morgan and Co MCS and Cass
Saddle ticked up 1.72% and 0.33% respectively. The Datvest MCS was the sole
faller of the day as it pared 1.28% to $4.7383. -efesecurities

 <mailto:info at bulls.co.zw>

Global Currencies & Equity Markets

South Africa

South African rand firms on rate hike bets, ratings relief

(Reuters) - The rand strengthened on Monday amid relief that South Africa's
credit rating was not downgraded and bets on a large interest rate hike from
the central bank later this week.

At 1515 GMT, the rand traded at 19.2575 against the dollar , about 1%
stronger than its Friday closing level.

The dollar last traded at 103.36 against a basket of global currencies,
about 0.31% stronger.

Analysts polled by Reuters predict a 25-basis-point (bp) rate hike by the
South African Reserve Bank (SARB) on Thursday, in what could be its final
hike of 2023, but markets have swung to pricing in a bigger rise.

"This will be one of the most important decisions in years. Our house view
is for a 25 bp hike," Rand Merchant Bank (RMB) analysts said in a research
note.

"Market pricing shows that they will do at least 50 bp, and maybe even 75
bp. The more they hike the better for the rand."

Another factor contributing to positive momentum for the rand was S&P's
decision not to downgrade South Africa on Friday, ETM Analytics' Kieran
Siney said in emailed comments.

Ratings agency S&P Global held off from changing South Africa's sovereign
credit rating or outlook, in a reprieve for South African markets after a
turbulent two weeks during which local assets were shaken by a U.S.
allegation that a Russian ship had picked up weapons in South Africa in
December.

The rand hit an all-time low against the dollar on Friday, at 19.5225
against the greenback.

South Africa is facing a crippling power crisis, where households and
businesses are left in the dark for up to 10 hours daily. Struggling state
utility Eskom warns that could intensify during the winter months, further
damaging Africa's most industrialised economy.

Shares on the Johannesburg Stock Exchange were down, with both the blue-chip
Top-40 index (.JTOPI) and the broader all-share index (.JALSH) closing about
0.3% weaker.

South Africa's benchmark 2030 government bond was weaker, with the yield up
7 basis points to 11.250%.

Nigeria

Naira gains across market as dollar demand slows

Naira on Monday strengthened across foreign exchange market segments as
demand for dollars by the end users moderated.

At the parallel market, popularly called black market, naira appreciated by
0.26 percent as the dollar traded at the rate of N758 on Monday as against
N760/$ on Friday.

In April, the naira gained 0.67 percent to close the month at N740/$ from
N745/$ at the beginning of the month, according to a monthly report by
Financial Derivatives Company (FDC).

The nation’s currency also appreciated by 0.28 percent as the dollar was
quoted at N463.50 on Monday from N464.80/$ on Friday at the Investors and
Exporters (I&E) forex window, data from the FMDQ indicated.

Most currency dealers who participated at foreign exchange market auction
maintained bids between N460.00 (low) and N467.00 (high) per dollar.

Last month, the dollar traded within a band of N462/$-N464/$ at the
investors’ and Exporters’ Foreign Exchange window.

This reduced the parallel market premium to N277.88/$ at the end of April
from N288/$ at the end of March. The appreciation in the parallel market
rate was partly induced by subdued forex demand, the report stated.

The gross external reserves are likely to continue its steady depletion in
the near term as major sources of dollar inflows dwindle.

In the month of April, Nigeria’s Foreign exchange reserves maintained its
downward trajectory. It fell by 0.45 percent to close the month at $35.25bn
on April 28th from $35.41bn at the start of the month.

This was as a result of lower oil prices alongside the decrease in domestic
oil production. In April, the price of Brent crude declined by 0.7 percent
to $79.31pb from $79.89pb at the end of March while domestic oil production
fell by 1.5 percent to 1.35mbpd. The country’s import and payments cover
decreased by 0.49 percent to eight months from 8.04 months at the beginning
of the month, the FDC report said.

“The further depletion of the reserves will limit the CBN’s ability to
intervene in the forex market, which could lead to Naira depreciation. Also,
the depletion of external reserves could douse investor confidence as
investors become worried about the country’s ability to meet its
obligations,” the report stated.

 <mailto:info at bulls.co.zw>

Global Markets

Dollar gains against yen as Fed policy, debt ceiling in focus

(Reuters) - The dollar rose against the Japanese yen on Monday, holding just
below a six-month high, as investors waited on fresh data to signal whether
the U.S. Federal Reserve is likely to continue hiking interest rates, while
watching for news of a congressional deal to raise the U.S. debt ceiling.

The greenback has gained for the past two weeks as stronger than expected
economic reports and hawkish Fed officials keep the prospect of further
interest rate increases alive.

“The dollar had a nice two-week bounce, helped by rising U.S. interest
rates,” said Marc Chandler, chief market strategist at Bannockburn Global
Forex in New York.

Comments from Fed Chair Jerome Powell on Friday that tighter credit
conditions could mean fewer rate hikes pulled the greenback off its highs,
however.

“It seemed to me to be the strongest case yet for a pause,” Chandler said.
“I look for some broad consolidation as we wait for the next shoe to
drop.”

The dollar got a mild boost after St. Louis Fed President James Bullard said
on Monday that the Fed may still need to raise its benchmark interest rate
by another half-point this year.

Minneapolis Fed President Neel Kashkari also said it was a "close call"
whether he would vote to raise interest rates or to pause the central bank's
tightening cycle when it meets next month, while San Francisco Fed President
Mary Daly said it's too soon to say whether the U.S. central bank will raise
rates at the June 13-14 policy meeting.

Atlanta Fed President Raphael Bostic said he was comfortable waiting "a
little bit" before deciding on any further moves, while Richmond Fed
President Thomas Barkin said he was "still looking to be convinced" that
inflation is in a steady decline.

The Fed reported on Monday an annual survey showing that inflation has
eroded U.S. households' sense of financial security, with many saying they
had reduced their savings to make ends meet, felt less secure about
retirement, and had delayed purchases or swapped into cheaper products as
they shopped.

The greenback was last up 0.46% on the day at 138.55 yen , just below a
six-month high of 138.75 reached on Thursday.

The euro gained 0.12% to $1.0819, having hit a more than seven-week low of
$1.0760 on Friday.

The dollar index , which measures the greenback against six other major
currencies, was up 0.15% at 103.17, hovering below last week's high of
103.63, a level last seen on March 20.

Investors are also focused on negotiations to raise the U.S. debt limit,
with the risk of a default seen as denting risk sentiment even as it is
viewed as unlikely.

U.S. President Joe Biden and House of Representatives Republican Speaker
Kevin McCarthy will meet on Monday to discuss the debt ceiling, after a
phone call on Sunday that both sides described as positive.

"Friday there was a bit of a setback but there's a bit more optimism after
the weekend," said Francesco Pesole, FX strategist at ING. "Markets are
seeing a deal on the debt limit and at the same time the Fed pushing back on
rate cuts which is ultimately proving positive for the dollar."

Sterling was little changed on the day at $1.2442, after hitting a
three-week low of $1.2392 on Thursday.

The Aussie was also steady at $0.6652.

The New Zealand dollar rose 0.18% to $0.6288, with traders ramping up bets
to 1-in-3 for a half-point hike by the Reserve Bank on Wednesday.

The Chinese yuan weakened to 7.0465 per dollar in offshore trading, creeping
back toward Friday's six-month low of 7.0750.

The yuan has been under pressure on growing signs China's post-COVID-19
recovery may already be petering out, but got some respite on Friday after
the People's Bank of China pledged to curb large exchange rate fluctuations.

 <mailto:info at bulls.co.zw>

Commodities Markets

Gold dips as Fed officials suggest higher-for-longer US rates

President Joe Biden and House Republican Speaker Kevin McCarthy will discuss
the debt ceiling on Monday, which will be closely watched to see if a
resolution is reached after negotiations broke off on Friday.

While worries over a deal on the debt ceiling not being implemented before
June 1 could cause some flight-to-safety buying into gold, the marketplace
seems to believe that a financial crisis can be averted, said Jim Wyckoff,
senior analyst at Kitco Metals.

Bullion traders were also watching the dollar closely, which was a major
element in the lack of buying interest in the gold market recently, Wyckoff
said.

Markets await the minutes of the latest U.S. Federal Open Market Committee
meeting due on Wednesday. Markets are pricing in a 68.6% chance of rates
being held steady next month, yet a 31.4% chance of a 25-basis-point hike,
the CME FedWatch tool showed.

Minneapolis Fed President Neel Kashkari told CNBC that “it may be that we
have to go north of 6%” to get inflation back to the Fed’s 2% target,
while St. Louis Fed President James Bullard said there might be the need to
go higher on the policy rate.

Gold tends to lose appeal in a high interest rate environment.

″$1,960 remains a key zone of support, a significant break of which could
signal a much deeper correction is on the cards,” Craig Erlam, a senior
market analyst at OANDA, wrote in a note.

Spot silver fell 0.6% to $23.67 per ounce, platinum was up 0.6% to $1,068.88
while palladium dipped 1.6% to $1,488.87.

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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