Bulls n Bears Daily Market Commentary : 29 May 2023

Mon May 29 22:12:39 CAT 2023

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Bulls n Bears Daily Market Commentary : 29 May 2023

ZSE commentary

Mashonaland highlights the session…

Mashonaland Holdings anchored activity aggregates in weekopener as 33.18m shares worth $1.69bn exchanged hands. The trade accounted for 98.02% of total volumes traded and 83.95% of the value outturn. Volumes swelled 1606.09% to 35.09m while, turnover declined 7.59% to $2.13m. Zimre Holdings headlined the winners of the day on a 15.00% surge to $23.0000, trailed by Zimpapers that rose 14.99% to $9.9700.

TSL edged up 14.99% to settle at $277.7000 while, SeedCo Limited put on 14.55% to $741.8368. Conglomerate Meikles ticked up 14.34% to $1,143.1572. Edgars led the fallers of the day on a 10.71% dip to $50.0000 as banking group NMB trimmed 8.08% to $100.0000. Zimplow slipped 0.76% to $85.0000 while, Ariston completed the top five shakers of the day on a 0.0012% loss to $15.7500. The primary All Share Index extended 3.52% to 99230.53pts while, the ZSE Top Ten Index improved 3.73% to 60847.16pts.

ZSE Agriculture Index gained 5.49% to 342.94pts while, the Mid Cap Index grew 2.77% to 179839.67pts. Morgan and Co MCS led the ETF rising tide as it charged 10.12% to $60.0000, followed by the Old Mutual ETF that shored up 4.08% to $20.9953. The Datvest ETF went up 3.42% to $5.1089 as the Cass Saddle ETF advanced 0.29% to $3.0086. The sole faller amongst the ETFs was the MIZ that shed 3.02% to $3.5662. Tigere REIT surged 14.72% to $92.7875 on 1.24m units, worth $115.16m..-efesecurities

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Global Currencies & Equity Markets

South Africa

Rand hits all-time weakest level against the US dollar

The rand this week plunged to its weakest level against the US dollar of 19.84 after the South African Reserve Bank raised its key repo rate by 50 basis points in its attempts to fight inflation.

ING economists expect the rand to weaken to 20 to the US dollar in the near term, according to fxstreet.com. 

Astral Food profits plunge

Astral Foods this week reported revenue growth to R10-billion for the half-year ended March 2023, up 5.7% from the half-year ended March 2022. The company achieved higher revenue under an “extremely trying” operational environment.

“This increase was largely as a result of higher feed prices on soaring raw material costs, and poultry selling prices were adjusted in an attempt to recover some of the large cost burdens the group has been forced to carry as a result of loadshedding and the failing municipal infrastructure,” the company said.

Astral’s operating profit declined by 88% to R98-million from R785-million previously, including R741-million loadshedding costs incurred during the

reporting period, which could not be recovered from the market.

Vunani reports a 14% decline in profit

Financial services group Vunani this week reported a 14% decline in profit to R62-million for the year ended February 2023 from R72-million for the comparable prior year.

However, Vunani reported a 33% increase in operating profit to R150.1-million. The group’s reporting segments include fund management, asset administration, insurance and investment banking, which comprises advisory services and institutional securities broking. 

Gold Fields shareholders shoot down remuneration report

This week, Gold Fields’ shareholders at the company’s annual general meeting (AGM) voted against its remuneration implementation report.

Thirty-six percent of votes cast at the AGM were against endorsing the remuneration implementation report. As a result, the company needs to engage with its shareholders in terms of the JSE-listing requirements and King Code IV.

Nigeria

Naira briefly trades N632/$ at I&E window as demand pressure worsens

The naira, on Friday, sold for as high as N632 per dollar at the investors and exporters (I&E) window amid increased demand.

The figure is the highest intraday rate ever recorded since the introduction of the window in April 2017.

The I&E foreign exchange (FX) window is the country’s official exchange rate window. It is the market trading segment for investors, exporters and end-users that allows for FX trades to be made at exchange rates determined based on prevailing market circumstances.

Data from FMDQ OTC Securities Exchange, a platform where FX is officially traded, showed that the opening sale price for Friday was N463.75/$, but it declined by 0.18 percent to close at N464.51/$.

The highest spot rate for the day was N632/$ while the lowest was N410/$.

At the end of the trading day, the market recorded a total of $144.72 million transactions.

Meanwhile, checks by TheCable showed that the exchange rate between the naira and the US dollar depreciated to N775/$ at the parallel market on Friday.

A currency trader in Victoria Island, Lagos, who spoke to TheCable, attributed the depreciation of the local currency to a high level of demand for the greenback compared to supply.

Currently, Nigeria operates two FX markets: one is the official rate, while the other is the parallel/street market rate.

Although the parallel segment is more accessible to traders and businesses who need FX, the Central Bank of Nigeria (CBN) has consistently maintained that it represents less than one percent of forex transactions and should never be used to determine the exchange rate.

Recently, Kashim Shettima, Nigeria’s new vice president, said removing petrol subsidy and ending the multiple exchange rate system are the top two issues which the administration of Bola Tinubu would have to face.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar nudges lower as U.S. debt ceiling deal dents safe-haven appeal

(Reuters) - The dollar nudged down on Monday, pulling back from six-month peaks against the yen as a U.S. debt ceiling deal lifted risk appetite in world markets and dented the greenback's safe-haven appeal.

U.S. President Joe Biden on Sunday finalised a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025, and said the deal was ready to move to Congress for a vote.

Having briefly touched a six-month high of 140.91 yen during Asia trade, the dollar drifted lower and was last down almost a third of a percent at 140.17 yen.

The dollar index , which measures the U.S. unit's value against a basket of other major currencies, was also a touch softer around 104.23 but not far from last week's two-month peaks.

The pull-back in the safe-haven dollar came as world stocks (.MIWD00000PUS) rallied on the positive news from Washington, although trade was generally subdued with parts of Europe, including Britain, on holiday along with the United States.

"An initial risk-on reaction is likely as the cloud of U.S. default has retreated," said Charu Chanana, a market strategist at Saxo Markets in Singapore.

"But focus will quickly turn to the fact that getting the deal is only a step in the process and an agreement from both the House and Senate by June 5 is still a big ask."

The agreement would suspend the debt limit through Jan. 1, 2025, and cap spending in the 2024 and 2025 budgets.

SPAIN ELECTION

In Europe, the euro slipped 0.2% to $1.0709 , showing little immediate reaction to news of a snap election in Spain.

Spanish Prime Minister Pedro Sanchez said on Monday polling would take place on July 23 after his left-wing coalition government suffered heavy losses in regional ballots on Sunday.

Upbeat world sentiment pushed the risk-sensitive Australian and New Zealand dollars off last week's six-month lows.

The Aussie rose 0.35% to $0.6541, while the kiwi edged 0.2% higher to $0.6058.

"We've got a risk-positive response so far to the debt deal news," said Ray Attrill, head of FX strategy at National Australia Bank.

"Obviously there's still the need to get this debt deal over the line, but I think markets are happy to travel on the presumption that it will get done before the new X-date."

U.S. Treasury Secretary Janet Yellen on Friday said the government would default if Congress did not increase the $31.4 trillion debt ceiling by June 5, having previously said a default could happen as early as June 1.

Talk that the U.S. rate hiking cycle may not be over as soon as hoped given signs of economic strength have bolstered the dollar and could support the currency even as U.S. debt ceiling worries abate.

The dollar was on course for a monthly gain of about 3% against the yen. The dollar index has gained 2.5% in May.

Data on Friday showed U.S. consumer spending increased more than expected in April and inflation picked up, adding to signs of a still-resilient economy.

Money markets price in a roughly 62% chance that the Federal Reserve will raise rates by 25 basis points in June, versus a roughly 26% chance a week ago.

Elsewhere, the Turkish lira touched a record low at 20.10 per dollar after President Tayyip Erdogan secured victory in the country's presidential election on Sunday, extending his increasingly authoritarian rule into a third decade.

Bitcoin, meanwhile, slipped 0.5% to $27,932, down from a three-week high hit earlier on .

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold, silver rate today trade tepid as US dollar climbs to ten week high on US debt ceiling optimism

Gold rate today opened higher but continue to trade tepid during early morning deals. Gold future contract for June 2023 expiry opened at ₹59,406 per 10 gm and went on to hit intraday high of ₹59,407 levels within few minutes of commodity market opening today. However, the precious yellow metal soon witnessed profit booking and gold price tumbled from its Monday highs. It soon made an intraday low of ₹59,271 per 10 gm. In international market, gold prices continue to oscillate around $1,975 per ounce levels, losing around 0.05 per cent from its Friday close in international spot market.

Similarly, silver rate today opened higher at ₹71,550 per kg but soon tumbled and hit intraday low of ₹71,111 per kg levels. In international market, silver price is oscillating around $23.222 per ounce levels, losing near 0.35 per cent during early morning deals.

What's pulling down gold, silver price today

On why gold and silver rate today is trading tepid Anuj Gupta, Vice President — Research at IIFL Securities said, "Gold and silver rate today is under pressure as US dollar has surged to 10-month high in last few sessions. This rise in US dollar can be attributed to the rise in optimism for breakthrough in US debt ceiling talks. Market is expecting that expected breakthrough may bring US economy on track as investment will start taking place in terms of US dollar."

Expecting further downside trend in bullion metals, Deveya Gaglani, Research Analyst - Commodities at Axis Securities said, "Gold prices extended their bearish trend for the third consecutive day, with the settlement around 59372, breaching the crucial support zone at the ₹59,500 level. Notably, the daily chart reveals a fresh multi-month low, accompanied by trading below the 20 and 60 Exponential Moving Averages (EMA). Furthermore, the Relative Strength Index (RSI) is approaching the 40 level, indicating strong downward momentum in the market. Adding to the negative sentiment, the probability of a rate hike in the upcoming June meeting has increased to 60 per cent, which could potentially serve as a catalyst for further downside pressure on gold."

On important levels in regard to gold and silver prices, Sugandha Sachdeva, Executive Director & Chief Strategist at Acme Investment Advisors said, "Gold prices have support at the ₹59,100 to ₹59,200 per 10 gm zone, or $1935 per ounce mark, and are likely to witness a bounce back towards ₹60,400 per 10 gm in the coming days; otherwise, a breach of this support zone can lead to a fall towards the ₹58,500 10 gm mark. As for silver, prices have strong support at the ₹69,500 per kg mark, and if that holds, expect buying interest to resume in coming days."

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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 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 securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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