Bulls n Bears Daily Market Commentary : 09 October 2023

Tue Oct 10 07:41:06 CAT 2023

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Bulls n Bears Daily Market Commentary : 09 October 2023

ZSE commentary

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

Market records marginal gains in week opener...

The ZSE recorded marginal gains in Monday's session as all the four indices
we review closed pointing northwards. Turnover on the VFEX outstripped value
traded on the ZSE by USD$47,266.66 highlighting depressed activity on the
ZWL$ denominated bourse. Activity aggregates faltered in the session as
volume traded fell 74.97% to see 961,951 shares worth $455,57m exchanged
hands. This represented a 48.95% declined in turnover. The trio of Edgars,
Econet and Delta drove the activity aggregates of the day, claiming a
combined 87.94% of the volume and 98.33% of the value traded.

The All-Share Index was 0.38% up at 131,814.26pts while, the Blue-Chip Index
firmed up 0.29% to close at 59,055.84pts. The Agriculture Index put on 0.23%
to 517.49pts while, the Mid-Cap Index added 0.61% to end the day pegged at
519,790.91pts. Banking group CBZ led the gainers list of the day as it
garnered 15.00% to close at $1,240.1000 with no offers while, Nampak surged
13.99% to $326.0000. Seed producer SeedCo Limited gained 5.76% to close
trading at $600.0000 while, roofing material producer Turnall Holdings
Limited closed at $26.7800 following a 3.40% ascent. Zimre Holding Limited
fastened the winners of the day as it put on a mere 0.02% to $90.1000.

Apparel retailer Edgars led the laggards of the day after plunging 12.74% to
end at a VWAP of $89.5264 while, bankers FBC eased 10.11% to $800.0000. Tea
producer Ariston shed 7.47% to $31.5235 while, brick producer Willdale
retreated 1.08% to settle at $10.0000. Telecommunication giant Econet
continued to lose its glitter as it declined 0.87% to end trading at
$471.4673. In the ETF category only, two funds registered price movement as
56,440 units worth $573,079.28 traded in the session. The Datvest Modified
consumer Staples was 13.83% higher at $7.9000 while, the Cass Saddle
agriculture ETF put on 0.38% to $7.2473. The Tigere REIT dropped $0.0100

to close trading at $230.0008.

VFEX extends losses...

The VFEX extended losses into the new week as the All-Share Index retreated
1.91% to 72.43pts. Bankers First Capital headlined the losers' list of the
day as it lost 15.49% to $0.0251 while, National Foods parred off 0.25% to
$1.5000. Fast foods producer Simbisa was 0.08% softer at $0.3994 as it
capped the fallers of the day. On the contrary, trading in the positive were
Axia and Simbisa that edged up 6.67% and 4.17% to see the former settle at
$0.0800 and $0.5000. Activity aggregates enhanced in the session as volume
traded ballooned 117.02% to 518,580 shares while, market spend jumped 38.54%
to $128,735.56. Volume leaders of the day were Axia, Padenga, Innscor and
Simbisa with a combined contribution of 96.78%. Turnover drivers of the day
were Innscor (+42.30%), Simbisa(+30.32%), Padenga(+15.36%) and
Axia(+11.52%).

Global Currencies & Equity Markets

South Africa

South African Rand a Sell at MUFG and Bank of America

The South African Rand and other emerging market currencies face increasing
headwinds amidst rising global bond yields, prompting two major investment
banks to announce new sell recommendations on the currency.

"We expect the ZAR to weaken further in response to rising U.S. yields and a
stronger USD," says Derek Halpenny Head of Research for Global Markets EMEA
& International Securities at MUFG.

MUFG say the Dollar is best placed to advance against the Rand in light of
the fundamental headwinds facing the currency which contrast to ongoing
support for the Dollar which has regained its dominance since it bottomed
out in late July.

But losses could be seen on other crosses as MUFG's call comes amidst a
breakdown in the Rand's technical setup against the Euro, leading
strategists at Bank of America to recommend buying EUR/ZAR as a
consolidation phase comes to an end.

"Possible wave 3 of (5) higher starting soon, which is bullish," says Paul
Ciana, a Technical Strategist at Bank of America.

As an emerging market currency, the Rand is typically exposed to any rise in
U.S. bond yields as this signals an increasing cost to global borrowing,
which is a natural headwind to growth.

MUFG says last week's release of the consensus-beating U.S. labour market
report for September will reinforce upward pressure on U.S. yields and the
USD by encouraging speculation over further Fed hikes.

"We are recommending a new long USD/ZAR trade idea," says Halpenny.

"The resilience of the US labour market supports the higher rates for longer
policy messages delivered by the Fed. A further sharp sell-off in the US
bond market should prove more disruptive for financial market conditions. A
further pick-up in financial market volatility and retrenchment from risk by
global investors will weigh more heavily on higher-yielding EM currencies
such as the ZAR," explains Halpenny.

MUFG also finds the Rand remains sensitive to commodity prices, which have
fallen back to year-to-date lows.

"Rising US yields will increase the risk of global growth slowing more ahead
at a time when growth in China is already weak," says Halpenny.

Looking at domestic considerations, MUFG reckons the ZAR could also be
undermined by domestic factors ahead of the release of the mid-term budget
on 1st November.

Preceding the budget is the National Treasury's August 31 warning of an
"exceptionally large" drop in tax revenue of ZAR22 billion for the first
five months of the year.

MUFG targets a rise in USD/ZAR to 20.30.

Turning to BofA's call, Ciana says he went long on the Euro to Rand exchange
rate on October 2nd at 20.15.

His analysis of the charts (see above) shows the uptrend is supported by a
rising 200-day Simple Moving Average and trend line at 19.85 / 19.65.

"Possible wave 3 of (5) higher starting soon, which is bullish. MACD turning
up to confirm price support holds and a rally coming. This setup implies a
retest of YTD highs or new highs," explains Ciana.

However, a move below 19.36 invalidates the wave count.

"Ideally trend line holds as support (19.65). EURZAR supported, ending
consolidation phase to rally Trend line and 200d SMA supporting spot. Wave 3
of (5) higher may follow," he adds.

A rising USD/ZAR and EUR/ZAR implies a GBP/ZAR exchange rate rise back to
the 2023 highs.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar gains versus euro as Israel-Palestinian conflict spurs safety bid

(Reuters) - The safe-haven dollar rose on Monday against the euro as
military clashes between Israel and the Palestinian Islamist group Hamas
raised concerns that the conflict might widen beyond Gaza, but the dollar
eased against other major currencies.

Israel's response to the multi-pronged attack by Palestinian gunmen from the
Gaza Strip will "change the Middle East," Prime Minister Benjamin Netanyahu
said on Monday.

Risk sentiment was fragile as Israel said it had called up 300,000
reservists and was imposing a total blockade of the Gaza Strip in a sign of
a potential ground assault in response to the weekend attack by Hamas.

The Israeli shekel weakened about 3.1% to 3.9550 per dollar after the Bank
of Israel announced it would sell up to $30 billion of foreign currency in
the open market to maintain stability. Earlier, the shekel tumbled to an
almost eight-year low of 3.9880 per dollar.

"It's a little bit of risk aversion, not a wholesale panic and not a huge
amount of sell-off, but just a little bit of a move towards safety as
markets wait to see how things develop," said Brad Bechtel, global head of
FX at Jefferies in New York.

"What we've been getting used to over time is the fact that geopolitical
events typically have a very short-lived market impact," Bechtel added.

The euro fell 0.19% to $1.0566 but the dollar index , a measure of the U.S.
currency against six others, retreated 0.16% after earlier trading higher.

The Japanese yen , another traditional safe-haven currency, edged higher
0.57% higher to 148.47 per dollar. Japan was closed for a holiday.

As long as the conflict is contained to Israel and Hamas, "we can go back
and focus on the economic fundamentals," said Marc Chandler, chief market
strategist at Bannockburn Global Forex in New York.

"I'm still not convinced that the geopolitics is going to drive the
markets," Chandler added.

Sterling rebounded from earlier losses to trade slightly higher at 1.224
against the U.S. dollar, which also lost ground against the Canadian,
Australian and New Zealand dollars, along with the Norwegian krone and
Swedish krona.

The dollar drew support from Friday's data showing U.S. employment increased
by the most in eight months in September, potentially setting up for a
higher-than-expected inflation print on Thursday.

Net long positions on the dollar rose to a one-year high, according to U.S.
Commodity Futures Trading Commission data released on Friday.

The value of the net long dollar position was $10.55 billion for the week
ended Oct. 6.

But investors are not expecting another hike from the Federal Reserve in
November, according to CME Group data. Futures are pricing an 88.6%
probability that Fed policymakers keep rates on hold at its November policy
meeting.

"The key debate is whether the U.S. dollar's inverse relationship with risk
appetite will become more pronounced again. Its inability to capitalize on
healthy U.S. labor market data brings that thinking to the fore," said Paul
Mackel, global head of FX research at HSBC.

The dollar index posted its first weekly decline on Friday after 11
consecutive weeks of gains.

Rekindling recession fears in the euro zone, data showed on Monday that
German industrial production fell slightly more than expected in August, by
0.2% compared to the previous month.

In Asia, China's yuan held firm against the dollar on the first trading day
after Golden Week holiday, underpinned by a stronger-than-expected official
guidance fix.

The offshore yuan fell 0.24% to 7.2915 per dollar.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices extend rally

SJC gold price rose 0.2% to VND69.8 million ($2,860.36) per tael on Tuesday
morning.

Gold ring price increased 0.52% to VND57.35 million per tael. A tael equals
37.5 grams or 1.2 ounces.

Globally, gold prices continued to rise on Tuesday, a day after posting
sharp gains on increased market uncertainty due to conflict in the Middle
East, as dovish remarks from top U.S. Federal Reserve officials weighed on
the dollar and bond yields, according to Reuters.

Spot gold gained 0.1% to $1,862.80 per ounce by 0314 GMT, after earlier
hitting its highest since Sept. 29.

U.S. gold futures climbed 0.7% to $1,876.90."The events in the Middle East
have provided a catalyst for gold to rebound from oversold conditions," said
Kyle Rodda, financial market analyst at Capital.com.

In the longer run, however, U.S. rates will be the bigger driver, he said,
adding that yields are broadly very positive "and that's kryptonite for
gold."

Gold is seen as a safe-haven investment during times of economic
uncertainty, but as it yields no interest, it tends to lose its attraction
when interest rates rise.

.

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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