Bulls n Bears Daily Market Commentary : 04 October 2023

Thu Oct 5 07:12:05 CAT 2023

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Bulls n Bears Daily Market Commentary : 04 October 2023

ZSE commentary

 <https://www.dulys.co.zw/>  

Heavies drag down the market...

Losses in selected heavies weighed on the ZSE in midweek session to see
their own Index drop 4.61% to 57,772.27pts. The All-Share Index retreated
2.93% to end at 128,802.84pts while, the ZSE Agriculture Index trimmed 0.21%
to 510.95pts. On the contrary, the Mid Cap rose 0.59% to close at
505,930.12pts. Delta led the laggards of the day on a 10.28% dip to
$2,326.6811 as milk processor Dairiboard gave up 9.61% to close at
$416.0000. Property concern FMP eased 4.75% to finish at $119.0000 while,
Ariston was 2.61% softer at $31.1654. Telecoms giant Econet rounded up the
top five shakers of the day on a 2.02% slip to close at a price of
$480.3034. Headlining the risers of the day was seed producer Seed Co
Limited that closed 14.75% firmer at $642.0000 as First Mutual Holdings
improved 14.29% to $280.0000. Zimre Holdings advanced 11.52% to end pegged
at $92.0000 while, bankers CBZ went up 7.49% to $913.7500. Life assurer
Fidelity added 6.48% to settle at $150.0000 completing the top five gainers
of the session. Twelve counters registered losses against ten that gained
leaving the market with a negative breadth of two.

Activity aggregates were depressed in the session as seen by volumes that
plunged 52.42% to 3.85m shares while, value outturn shed 1.18% to $2.17bn.
Foreigners were net sellers in the session as outflows stood at $662.40m
while, inflows amounted to $11.59m. Volume leaders were Mashonaland Holdings
(22.94%), OKZim (20.90%), Econet (19.48%), Delta (15.85%) and Star Africa
(6.64%). Delta and Econet were the top traded counters by value as they
claimed 62.56% and 15.88% of the aggregate apiece. A total of 80,831 units
worth $1.22m exchanged hands in the five ETFs.

VFEX in marginal gains...

The VFEX scratched gains during the session as the All-Share Index stepped
up 0.06% to 74.85pts. African Sun Limited grew 11.11% to USD$0.0400 as Seed
Co International ticked up 2.95% to USD$0.2373. Leading losers of the day
was Innscor that slid 4.52% to USD$0.4900 as Simbisa declined 1.70% to
USD$0.3926. First Capital was 0.33% lower at USD$0.0301 while, Axia let go
0.13% to USD$0.0799.

Activity aggregates were depressed as volumes traded succumbed 13.06% to
245,175 shares while, turnover plummeted 50.17% to USD$52,196.15. Padenga,
Axia, Simbisa

and Innscor were the major volume and value drivers of the day contributing
96.26% to the former and 98.59% to the latter.

Global Currencies & Equity Markets

South Africa

South African rand slightly firms as US dollar dips

(Reuters) - The South African rand traded slightly higher on Wednesday
following several days of weakness as the softening of the U.S. dollar
supported risk sentiment.

At 1619 GMT, the rand traded at 19.2800 against the dollar ZAR=D3, about
0.3% stronger than its previous close.

The dollar index =USD, which tracks the greenback against six peers,was last
down around 0.4%.

The rand has been on a downward trajectory this week, tumbling against a
buoyant dollar on both Monday and Tuesday to sit around 2% weaker since the
start of the month.

The S&P Global South Africa PMI survey showed on Wednesday that activity in
the private sector held steady in September as firms scaled back output
somewhat due to rolling power cuts and cost pressures but took on more
staff.

Local retailers Woolworths WHLJ.J and Pick n Pay PIKJ.J warned they were
limiting the amount of eggs that shoppers can buy as the country's worst
outbreak of avian flu hit supplies.

The CEO of Sibanye StillwaterSSWJ.J, South Africa's biggest mining sector
employer, said the firm may be forced to close some loss-making shafts,
adding job cuts in platinum mining had become inevitable as prices of
precious metals fall.

On the Johannesburg stock market, the Top-40 .JTOPI and the broader
all-share .JALSH indices ended almost 0.3% lower.

South Africa's benchmark 2030 government bond ZAR2030= was weaker in
afternoon deals, with the yield up 6.5 basis points to 11.085%.

Nigeria

Naira among Africa's worst currencies, falls by 40% -W'Bank

The Nigerian naira is among the worst-performing currencies in Africa, the
World Bank has said.

It noted that the currency weakened by nearly 40 per cent against the US
dollar since a mid-June devaluation.

The global bank explained in its report titled, 'Africa's Pulse: An analysis
of issues shaping Africa's economic future (October 2023 | Volume 28).'

It stated that, "So far this year, the Nigerian naira and the Angolan kwanza
are among the worst performing currencies in the region: these currencies
have posted a year-to-date depreciation of nearly 40 per cent.

"The weakening of the naira was triggered by the central bank's decision to
remove trading restrictions on the official market. For the kwanza, it was
the decision of the central bank to stop defending the currency as a result
of low oil prices and greater debt payments."

Other currencies with significant losses so far in 2023, according to the
World Bank, included South Sudan (33 per cent), Burundi (27 per cent), the
Democratic Republic of Congo (18 per cent), Kenya (16 per cent), Zambia (12
per cent), Ghana (12 per cent), and Rwanda (11 per cent). It noted that
parallel exchange market rates are also compounding inflationary problems
for some countries in the African region.

In June 2023, the Central Bank of Nigeria directed Deposit Money Banks to
remove the rate cap on the naira at the official Investors and Exporters'
window of the foreign exchange market, and allow the free float of the naira
against the dollar and other global currencies. Since then, the naira had
fallen from N473.83/$ to around N800/$ officially.

Highlighting the widening difference between the parallel and official
exchange rates of the naira, the bank stated that this had been the case
from March 2020 until June 2023.

It said the parallel rate premium increased to 80 per cent in November 2022,
and then to about 60 per cent in June 2023, as the Central Bank's
interventions to restrict foreign exchange demand and keep the exchange rate
artificially low were met with declining FX supply from oil revenues.

The unification and liberalisation of the exchange rates in June 2023
allowed the NAFEX rate to converge to the parallel one, closing the gap, it
said.

It added, "However, resistance toward the increasing pressure on the
Nigerian naira coupled with limited supply of FX at the official window has
led to the reemergence of the parallel market premium."

Nigeria's growth rate would decelerate from 3.3 per cent in 2022 to 2.9 per
cent in 2023, the Washington-based bank highlighted.

It stated that the country's oil production had remained below OPEC+ quota
amid capacity issues and lower international oil prices and while non-oil
economic activity, particularly industry and services still supported
growth, policy actions to remove fuel subsidies and unify the exchange rates
might be weighing on these activities in the short term.

The World Bank noted that activity in Nigeria's manufacturing and services
sector contracted in August. "Weak business confidence and rising input
costs are driving the contraction of activity," it said. It stresses
business confidence appears to have weakened in Nigeria.

Commenting on the recent reforms of the new administration of Bola Tinubu,
the global bank disclosed that purchasing power of households was expected
to suffer in the short term.

It said, "The incoming Tinubu administration implemented a series of reforms
that included the removal of fuel subsidies and the devaluation and
unification of the exchange rate system. Petroleum prices have more than
tripled since the subsidies were lifted at the end of May.

"The naira has weakened by nearly 40 per cent against the US dollar since
the mid-June devaluation. Although these measures are intended to improve
the fiscal and external accounts of the nation, their inflationary effects
in the near term can erode the purchasing power of households and weigh on
economic activity."

 <mailto:info at bulls.co.zw> 

Global Markets

U.S. dollar retreats amid weak private payrolls

(Xinhua) -- The U.S. dollar lost in late trading on Wednesday, after
weaker-than-expected U.S. private payrolls based on the Automated Data
Processing Inc. (ADP) National Employment Report.

The dollar index, which measures the greenback against six major peers, sank
0.19 percent to 106.7994 in late trading.

ADP reported Wednesday that private job growth totaled 89,000 for September,
down from an upwardly revised 180,000 in August and below the 160,000
estimate from the Dow Jones. ADP also said annual wage growth slowed to 5.9
percent, the 12th consecutive monthly decline.

"We are seeing a steepening decline in jobs this month," said Nela
Richardson, chief economist at ADP. "Additionally, we are seeing a steady
decline in wages in the past 12 months."

The Institute for Supply Management said on Wednesday that its
non-manufacturing Purchasing Managers' Index (PMI) slipped to 53.6 last
month from 54.5 in August, and final services PMI slipped to 50.1 from 50.2.

"The final PMI data for September add to indications that the U.S. economy
has started to cool again after a resurgence of growth earlier in the
summer," said Chris Williamson, chief business economist at S&P Global
Market Intelligence.

The U.S. 10-year Treasury yield dropped 7.1 basis points to 4.73 percent
after trading at its highest level in about 16 years on Tuesday. The 2-year
rate slumped 8.6 basis points to 5.06 percent intraday. The U.S. dollar
index also retreated from its highest in about 11 months after the data.

In the eurozone, Hamburg Commercial Bank's final composite PMI, compiled by
S&P Global and seen as a good gauge of overall economic health, nudged up to
47.2 in September from August's 46.7. The final reading of S&P Global UK
services PMI fell in September to 49.3 from 49.5 in August, falling further
below the 50 threshold for growth.

In late New York trading, the euro increased to 1.0503 U.S. dollars from
1.0473 dollars in the previous session, and the British pound rose to 1.2137
U.S. dollars from 1.2085 dollars.

The U.S. dollar bought 149.0600 Japanese yen, higher than 148.9180 Japanese
yen of the previous session. The U.S. dollar was down to 0.9170 Swiss francs
from 0.9211 Swiss francs, and it rose to 1.3745 Canadian dollars from 1.3710
Canadian dollars. The U.S. dollar decreased to 11.0701 Swedish krona from
11.0918 Swedish krona. │

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips for eighth straight session on Fed rate-hike worries

Gold prices crept lower on Wednesday for the eighth consecutive session as
elevated U.S. Treasury yields amid expectations that the Federal Reserve
will keep interest rates higher for longer continued to weigh on investor
sentiment.

Spot gold

was down 0.1% at $1,821.69 per ounce, while U.S. gold futures

settled 0.4% lower $1,834.80.

The benchmark U.S. 10-year bond yield scaled fresh 16-year highs, making
non-yielding assets like gold less attractive.

"If the Fed continue to maintain rates at these levels, gold will continue
to be under pressure. I even think prices can fall to $1,750 if they manage
to break below $1,800," said Bob Haberkorn, senior market strategist at RJO
Futures.

Gold prices briefly ticked up earlier in the session after U.S. private
payrolls increased far less than expected in September.

Meanwhile, the U.S. services sector slowed in September as new orders fell
to a nine-month low, but the pace remained consistent with expectations for
solid economic growth in the third quarter.

Markets are now pricing in a 24% chance of another 25-basis point rate hike
from the Fed this year, according to the CME FedWatch tool.

Focus will now be on the key non-farm payrolls report due on Friday for more
clarity on Fed's rate-hike path.

"If the jobs report comes softer, then that will give gold ammunition to
rally," Haberkorn said.

"Downside risks are likely to persist as the landing points for gold's key
drivers remain uncertain. But we recommend those long (on) the metal to
hold, as we expect a recovery," UBS said in a note, lowering its year-end
gold price forecast by $100 to $1,850.

Gold losses came despite a softer dollar. The dollar index, which tracks the
greenback against six peers, was down 0.2%.

Auto-catalyst metal palladium was down 1.7% at $1,169.40 after hitting its
lowest since late 2018 earlier in the session.

Spot silver

fell 0.7% to $20.9986 per ounce, while platinum

lost 0.5% to $867.54.

.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

Bulls n Bears 

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