Bulls n Bears Daily Market Commentary : 30 May 2023

Wed May 31 00:31:18 CAT 2023

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Bulls n Bears Daily Market Commentary : 30 May 2023

ZSE commentary

All share breezes past 100,000 pts mark…

The ZSE continued to surge in Tuesday’s session as the mainstream All-Share Index firmed up 4.99% to 104,183.79pts  as it breezed past through the 100,000pts mark. The heavies Index rose 4.76% to 63,745.45pts. The ZSE Agriculture Index shot up 9.71% to 376.22pts while, the Mid-cap Index ticked up 5.85% to end at 190,360.21pts. Clothing retailer Edgars and bankers CBZ Holdings surged an identical 15.00% to close at $57.5000 and $699.6000 respectively. ZB jumped 14.98% to $241.3500 as BAT advanced a similar 14.98% to end at $6,216.0750. Hotelier RTG capped the top five winners’ list on a 14.97% gain to $58.3000. General Beltings led the fallers of the day after a 2.14% dip to $4.0002 while, Zimplow gave up 1.57% to $83.6667. Microfinance Getbucks dropped 0.91% to $32.7263 while, Delta completed the losers’ set on a 0.0003% retreat to $2,329.9441.

Activity aggregates traded mixed as volumes succumbed 72.40% to 9.68m shares while, turnover improved 33.22% to $2.84bn. Property outfit Mashonaland Holdings and Delta claimed 73.97% and 10.39% of the volume aggregate apiece. Value drivers of the day were Delta and Mashonaland that accounted for a combined 94.89%of the aggregate. A total of 673,665 units worth $2.48m exchanged hands in the ETF section. Gainers of the day were Morgan and Co MCS that edged up 12.86% to $67.7143, Old Mutual that surged 8.88% to $22.8589, Cass Saddle which added 3.20% to $3.1048 and MIZ which crawled up 0.11% to $3.5700. The Datvest MCS was the sole faller of the day after losing 2.00% to $5.0066. Tigere REIT ticked up 11.29% to $103.2655 on 77,600 units worth $8.01m. efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

New Russia-SA concerns push rand to record low

On Tuesday morning, the rand hit a new record low against the dollar amid concerns about South Africa's relationship with Russia.

The rand reached R19.8391/$ in early trading. A year ago, it was trading below R15.30.

By mid-morning, the local currency regained some of its losses to trade around R19.80. It was last trading at R24.45 to the pound and R21.15 to the euro.

"South Africa’s decision to provide diplomatic immunity to Russian President Vladimir Putin at the BRICS summit in August has unnerved traders," says Gryphon Asset Management research analyst and portfolio manager Casparus Treurnicht.

On Monday, government said it would provide diplomatic immunity to attendees of an upcoming BRICS ministerial meeting in Cape Town this week and the summit in Johannesburg later this year.

This comes as government navigates its legal options should Putin visit the country in August, after the International Criminal Court (ICC) issued a warrant of arrest for him. The ICC issued the warrant against Putin  for war crimes related to the alleged abduction of children from Ukraine. South Africa is a signatory to the Rome Statute of the ICC and is obliged to act on the arrest order.

But government insists that the declaration of immunity was "routine" and had nothing to do with Putin.

Along with the diplomatic immunity announcement, the SA Reserve Bank's warning about the potential threat of sanctions also hit the market, Treurnicht added.

On Monday, the bank warned that sanctions are a risk due to South Africa's stance on Russia’s invasion of Ukraine. In its latest financial stability review, it warned the sanctions may hold dire consequences for South Africa’s financial system.

Nolan Wapenaar, co-chief investment officer of Anchor Capital, says these concerns added pressure on the rand.

Wapenaar told News24:

Putin is like a recent bruise for the economy. Every time you rub a bruise, it hurts just a little bit more. That is clearly a part of the rand’s woes.

Wapenaar noted that the dollar was also slightly firmer on Tuesday morning against other currencies. "The pain is both self-inflicted and external this morning."

Expectations of another round of rate hikes by the Fed have raised demand for the dollar, said Bianca Botes, director at Citadel Global.

Nigeria

Naira appreciates against the US Dollar to trade at N770/$1 on 30th May 2023

The Nigerian Naira experienced a notable appreciation against the US Dollar at black market to trade at an average rate of N770/$1, showcasing a significant 1.28% appreciation on Tuesday, May 30th, 2023, after eight consecutive depreciations from May 17, 2023.

This is according to information obtained from BDC traders, as reported by Nairametrics.

The Naira witnessed a decline in value against the euros on Tuesday, May 30, 2023, as it experienced a depreciation of 0.37%, settling at an average rate of N818/€1, as compared to N815/€1 recorded on May 26, 2023.

However, the Naira appreciated against the British Pound by 0.52% to trade at an average rate of N955/£1 on Tuesday, May 30, 2023, in comparison to last week Friday’s trading session, where the pounds stood at N960/£1

These fluctuations in the Nigerian currency reflect the ever-changing dynamics of the global foreign exchange market, influenced by a multitude of factors such as economic indicators, geopolitical events, and market sentiment.

As market participants continue to closely monitor these developments, it remains to be seen how the Naira will fare during the week under the leadership of the newly elected president, President Bola Ahmeed Tinubu.

It is also crucial to note that black-market exchange rates can vary significantly across different locations in the country. These variations are influenced by factors such as survey timing, demand and supply dynamics, purchasing power, and other relevant economic factors.

The breakdown of black-market rates is as follows;

Naira/Dollar (NGN/USD)

Buy rate – N766/$1

Sell rate – N770/$1

Naira/Pound (NGN/GBP)

Buy rate – N937/£1

Sell rate – N955/£1

Naira/Euro (NGN/EUR)

Buy rate – N805/€1

Sell rate – N818/€1

However, at the cryptocurrency P2P Exchange market, the FX rate experienced a continued appreciation from the close of last week’s trading session, trading at a minimum of N760.90/$1. This represents a significant 1.50% increase from last Friday trading session when it recorded N772.50/$1. These figures are according to data obtained from a P2P exchange platform.

Breakdown of the peer-to-peer rates is given below:

Naira/Dollar (NGN/USD)

Buy rate – N760.00/$1

Sell rate – N760.90/$1

Naira hits record low against the US Dollar to trade at N780/$1 on 26th May 2023

The Nigerian Naira experienced a continued weakening against the US Dollar at black market, reaching a new low at the end of the week. On Friday, May 26, 2023, the average exchange rate plummeted to N780/$1, showcasing a significant 1.96% depreciation compared to the previous day’s trading session where the dollar was valued at N765/$1.

This decline marks the highest drop in the value of the dollar since the beginning of the year and since November 21, 2022, when it last reached the N780/$1 mark.

This is according to information obtained from BDC traders, as reported by Nairametrics.

In a massive turn of event, the Naira witnessed a notable surge in value against the Euro as the week drew to a close. On May 26, 2023, it experienced a significant appreciation of 0.61%, settling at an average rate of N815/€1, as compared to N820/€1 recorded on May 25, 2023.

However, the Naira depreciated against the British Pound by 0.52% to trade at an average rate of N960/£1 on Friday, May 26, 2023, in comparison to the preceding day’s trading session, where the pounds stood at N955/£1

These fluctuations in the Nigerian currency reflect the ever-changing dynamics of the global foreign exchange market, influenced by a multitude of factors such as economic indicators, geopolitical events, and market sentiment.

As market participants continue to closely monitor these developments, it remains to be seen how the Naira will fare in the coming weeks.

It is also crucial to note that black-market exchange rates can vary significantly across different locations in the country. These variations are influenced by factors such as survey timing, demand and supply dynamics, purchasing power, and other relevant economic factors.

The breakdown of black-market rates is as follows;

Naira/Dollar (NGN/USD)

Buy rate – N770/$1

Sell rate – N780/$1

Naira/Pound (NGN/GBP)

Buy rate – N945/£1

Sell rate – N960/£1

Naira/Euro (NGN/EUR)

Buy rate – N800/€1

Sell rate – N815/€1

However, at the cryptocurrency P2P Exchange market, the FX rate experienced an appreciation, trading at a minimum of N772.50/$1. This represents a 0.33% decrease from the previous day’s trading session when it was recorded at N775.05/$1. These figures are according to data obtained from a P2P exchange platform.

Breakdown of the peer-to-peer rates is given below:

Naira/Dollar (NGN/USD)

Buy rate – N771.00/$1

Sell rate – N772.50/$1

 <mailto:info at bulls.co.zw> 

Global Markets

Yen stronger post-emergency meeting, dollar stays lower

Currency markets were choppy on Tuesday as the dollar hit a 10-week high against peers and a six-month top versus the yen before retreating after Japanese officials gave their currency a nudge.

Japan will closely watch currency market moves and respond “appropriately” as needed, the country’s top currency diplomat said on Tuesday after financial authorities met in response to a weakening in the yen to its softest in six months versus the dollar.

The yen strengthened on news of the unscheduled meeting, and held onto those gains, with the currency last up 0.46% versus the dollar at 139.80 having earlier risen to 140.93, its highest since November 2022.

Meanwhile the dollar oscillated in trading after U.S. President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the U.S. debt ceiling and cap some federal spending in order to prevent a debt default.

That helped the dollar index, which measures the U.S. currency against six major peers, hit 104.53 in European trading, its highest in 10 weeks. But it then retreated, falling as low as 103.870. It last fell 0.12% to 104.09, clawing back some of those earlier losses.

“A lot of that has to do with how oil has kind of fallen apart today,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.

Oil prices fell more than 4% on Tuesday as mixed messages from major producers clouded the supply outlook ahead of the OPEC+ meeting this weekend.

“People are scratching their heads: what does this mean for demand?” said Bregar. “And so with that, I think we’ve seen a little bit of a safe haven bid come back into the dollar.”

Adam Button, chief currency analyst at ForexLive, hypothesized that the dollar’s dip despite a deal on the debt ceiling could be chalked up to end-of-the-month profit taking.

“It’s been a one-way trade in the dollar all month long, and given the uncertainty around the (U.S. Federal Reserve) and the economic outlook later in the year, some market participants are taking a bit off the table as the month turns,” he said.

Looking ahead, the market will be closely watching a readout of nonfarm payroll data due on Friday, which could provide key insight into the strength of the U.S. labor market.

“The jobs run has been nothing short of spectacular and we’re way overdue for disappointing jobs,” said Button.

The euro was last up 0.2% to $1.0728, having earlier hit a two-month low, while the pound was last trading at $1.4061, up 0.46% on the day.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold rebounds as debt deal optimism weighs on dollar, yields

Gold bounced back from early losses on Tuesday, as the dollar pulled back and Treasury yields slid on wider market optimism about the U.S. debt ceiling deal.

Spot gold rose 0.8% to $1,958.59, after hitting its lowest since March 17 earlier. U.S. gold futures added 0.7% at $1,958.

The dollar eased from 10-week highs, making bullion cheaper for holders of other currencies, while benchmark 10-year Treasury yields hit a one-week low.

Along with these positive elements, “you could also see some fund managers squaring up positions at the end of the month, taking profits on their short positions and buying back”, said Jim Wyckoff, senior analyst at Kitco Metals.

“In the near term, gold prices are going to trade sideways to lower until we see a fresh catalyst.”

Returning from a long U.S. weekend, traders were also assessing Friday’s surprise strong U.S. economic data that bolstered the case for further monetary policy tightening to curb inflation.

While earlier worries on the U.S. debt deal had supported prices, repricing of the Federal Reserve’s rate hike path was keeping gold pressured, Saxo Bank’s head of commodity strategy Ole Hansen said.

Zero-yield gold tends to lose appeal in a high-interest rate environment.

Traders now see the Fed as more likely to hike rates next month than leave them unchanged, with the debt deal seen easing some of the economic risks that could have kept the central bank on the sidelines.

The deal faces its first test in Congress, with both Democratic President Joe Biden and top congressional Republican Kevin McCarthy expecting enough votes to pass it into law.

Silver was 0.1% higher at 23.22 per ounce, platinum was down 0.6% at $1,018.75 and palladium slipped 0.5% to $1,408.21

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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