Bulls n Bears Daily Market Commentary : 04 September 2023

Tue Sep 5 05:52:39 CAT 2023

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Bulls n Bears Daily Market Commentary : 04 September 2023

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

Zimbabwe Stock Exchange (ZSE)

Some positive returns have been noticed across the board as the market opened the week with some improved liquidity centered on the blue-chip counters. Overall Market Cap improved by 0.21% as it closed at ZWL$9.74 trillion by the end of today's trading session. Total turnover increased by 53.35% to ZWL$ 958.38 million and Total volumes traded went up by 19.67% to ZWL$1.73 million. Delta, OK Zimbabwe, and Mashonaland Holdings were today's three most traded counters, constituting about 93.2% of the total turnover.

However, overall losses outweighed the marginal returns realized across the board. The benchmark All-Share Index lost 0.19% to 121,965.73 points at the back of 11 risers and 6 decliners. The Top-15 index decreased by 0.17% to close at 78,274.21 points, and 0.21% was trimmed on the gigantic Top 10 Index.

The mover's list for today was led by the telecoms giant, Econet Wireless, after topping the list with a 7.73% return as it closes at $517.03. Zimre Holdings added 4.03% to close at $70.00. Trailing the risers list for today were Star Africa Corporation, EcoCash Holdings Ltd, and Meikles Ltd.

Seed Co led the laggards list for today after losing 11.36% to close at $1, 000.00. Featured on the list as well were OK Zimbabwe, Mashonaland Holdings, and Tanganda Tea Co Ltd which trimmed 7.75%, 3.99%, and 3.72% to close at $120.15, 120.01, and $999.95, respectively.

Victoria Falls Stock Exchange (VFEX) 

33,111 shares worth US$ 12,782 exchanged hand on 33 trades that were executed on the USD Bourse. The VFEX All Share Index, however, went down by 0.69% to close at 70.05 points as the losses recorded on Simbisa, Innscor, and National Foods outweighed the gains recorded on Axia Corp Ltd. 

Global Currencies & Equity Markets

South Africa

WEAKER RAND-DOLLAR EXCHANGE RATE A FACTOR IN FUEL PRICE HIKES - ANALYST

CAPE TOWN - An economist said the R1.71 cents fuel hike announced on Monday is due to two reasons.

The Department of Mineral Resources and Energy announced on Monday that the price of petrol and diesel would increase on Wednesday.

READ: SA motorists to feel the squeeze with huge fuel price hikes on Wednesday

Chief economist at the Bureau for Economic Research at Stellenbosch University, Hugo Pienaar, said the increase was based on current local and international factors.

"The significant increase in domestic fuel prices is to a large extent because of much higher diesel and gasoline prices. In conjunction with that, we've also seen the rand-dollar exchange rate weaken over the past month."

Pienaar said whether or not South Africans experienced some relief in the coming months depended on the stability of the oil price and the rand-dollar exchange rate.

Nigeria

Naira slumps against Dollar at investors, exporters window

The Naira depreciated against the dollar on Monday as it exchanged at N747.87 at the Investors and Exporters window.

The Naira dropped by 1.01 per cent compared to the N740.38 it exchanged for the dollar after the close of business on Sept. 1.

The open indicative rate closed at N772.06 to the dollar on Monday.

'Naira redenomination': Chartered Institute of Treasury Mgt. warns President Tinubu

A spot exchange rate of N799.90 to the dollar was the highest rate recorded within the day’s trading before it settled at N747.87.

The Naira sold for as low as N730 to the dollar within the day’s trading.

A total of 74.64 million dollars was traded at the investors and exporters window on Monday.

 <mailto:info at bulls.co.zw> 

Global Markets

Global Markets

Dollar eases as risk appetite improves on China’s measures

LONDON (Reuters) – The safe-haven dollar fell on Monday as risk sentiment improved on hopes China’s policy stimulus might stabilise the economy, while U.S. jobs data boosted bets the Federal Reserve could be at the end of its rate hike cycle.

With U.S. markets closed on Monday, liquidity is likely to be thin and traders hesitant to place large bets.

The dollar, against a basket of currencies, inched 0.15% lower to 104.08, but remained close to the two-month peak of 104.44 it touched on Aug. 25. The index gained 1.7% in August, snapping a two-month losing streak.

China stepped up measures to boost the country’s faltering economy, with Beijing planning further action including relaxing home-purchase restrictions.

The China-sensitive euro was up 0.25% at $1.0799, just off a 10-week low touched last week against the dollar. The single currency has weakened almost 12% this summer.

The Australian dollar and the New Zealand dollar also got a lift from those measures. [AUD/]

“The U.S. dollar is softening against most other G10 currencies today as risk appetite improves on the back of China support measures,” said Jane Foley, head of FX strategy at Rabobank.

In the meantime, data on Friday showed U.S. job growth picked up in August, but the unemployment rate jumped to 3.8%, while wage gains moderated.

A string of economic data highlighting moderating inflation as well as an easing labour market have added to the impression the U.S. economy is cooling without slowing sharply, reinforcing hopes that the economy is set for a soft landing.

Markets are pricing in a 93% chance of the Fed holding steady on rates this month, and over a 60% probability of no more hikes this year, the CME FedWatch tool showed.

The euro was untouched by European Central Bank President Christine Lagarde saying on Monday that central banks must pin inflation expectations at their targets at a time when changes in labour and energy markets as well as geopolitical turmoil are causing price swings.

Last week, ECB board member Isabel Schnabel said that euro zone growth is weaker than predicted just a few months ago but this does not automatically void the need for more rate hikes, especially as investors are undoing some of the ECB’s past work.

“The euro could have derived a little boost from expectations that, on balance, the ECB will maintain a hawkish bias in part to prevent market rates falling too soon. Schnabel’s comments provided an insight into this,” Foley added.

POLICY FOCUS

British finance minister Jeremy Hunt said at the weekend that inflation was on track to halve by the end of 2023, vowing to focus on the goal as he laid out his priorities ahead of the reopening of parliament after the summer break.

Sterling was up 0.34% at $1.2633 after revised British data published on Friday showed the economy recovered faster from the pandemic than previously thought.

Elsewhere, the Australian dollar added 0.2% to $0.6462 ahead of the Reserve Bank of Australia policy meeting on Tuesday when it is expected to stand pat. A Reuters poll showed that all but two of 36 economists said the RBA would hold its official cash rate at 4.10% on Sept. 5.

The Canadian dollar slipped 0.07% to 1.359 per dollar ahead of the Bank of Canada’s policy meeting this week, with the central bank expected to hold rates.

Looking ahead, investor focus will be on a number of Fed officials due to speak this week for clues on what the U.S. central bank will do at its next policy meeting on Sept. 19-20.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Yuan and Yen Depreciation Sees Gold Prices Hit Fresh Record Highs

GOLD PRICES in China and Japan – the world's 2nd and 3rd largest national economies respectively – hit fresh all-time highs on Monday as both the Yuan and the Yen continued to weaken against the Dollar on the FX market,  writes Atsuko Whitehouse at BullionVault.

US Dollar gold meanwhile steadied on Monday after rallying into the end of the summer amid speculation that the Federal Reserve has reached the end of its rate-raising cycle as Beijing tries to stabilize China's economy with a steady drip of policy stimulus measures.

"Gold is also one way locals can hedge against CNY depreciation," say analysts at Citi Research of the Chinese currency.

The Yuan has weakened by more than 5% against the US Dollar so far this year, including a 1.6% drop in August which saw the People's Bank of China on Friday cut the amount of foreign currency that financial institutions are required to hold in reserve.

Gold prices on the Shanghai Gold Exchange rose to ¥465 per gram overnight, 0.4% higher than last week's new gold record peak, and continued to show a historic premium to London quotes, offering new imports of bullion an incentive of $45 per Troy ounce, rebounding from last week's from new all-time highs.

Chart of Shanghai gold price in Yuan plus premium/discount to London Dollar quotes. Source: BullionVault

"It seems policymakers are intent on at least temporarily curbing gold demand," Citi continues in a recent note, attributing the recent spike in Shanghai premiums to the reduced number of gold import licenses issued to local banks by the People's Bank of China, a move first identified by BullionVault in July as the Yuan worsened its drop on the currency markets.

Gold prices in Japanese Yen also reached a new all-time high in early trading on Monday, climbing to ¥9152 per gram in spot-market trade as the currency traded over 11% lower for 2023 to with 2.3% decline against the Dollar last month.

"The rise in US interest rates is naturally a factor in the rise of the Dollar, which in turn creates Yen depreciation," says Bruce Ikemizu, chief director of the Japan Bullion Market Association, also pointing out that the strong performance of gold has diverged from its typical relationship with interest rates, also reflected in the "double whammy" of the rise in Yen-denominated gold.

"Like equities, which have continued to shrug off the negative implications of rising real [interest] rates, gold – which moves inversely to real rates and in turn to the US Dollar DXY – has remained extremely resilient," noted Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management last week.

The Dollar index – a measure of the US currency's value versus its major peers – fell 0.2% on Monday following two consecutive daily advances.

Ahead of the Fed's meeting scheduled on 19-20 September, traders now see a 93% chance of the US central bank leaving Dollar interest rates unchanged this month, increasing from 78% a week ago.

Gold prices in the US Dollar edged up by 0.1% to $1944 per ounce after rising 1.3% last week, faded from Friday's 1-month high at $1952 after mixed news on the US jobs market was followed by less-awful data from the manufacturing sector.

Already back to mid-June highs for UK and Euro investors, wholesale bullion in the spot market edged lower 0.2% to £1538 and €1798 per ounce on Monday.

European shares rose meanwhile, with the pan-European Stoxx 600 index up 0.5% Monday lunchtime, echoing an upbeat mood in Asia, led by Chinese shares after embattled Chinese property developer Country Garden won approval from its creditors to extend payments for an onshore private bond.

More policy action is expected from Beijing, including relaxing restrictions on home buying.

"Chinese newspapers reported a jump in real estate transactions in Beijing and Shanghai over the weekend after the cuts to mortgage rates and downpayment ratios," say analysts at RBC Capital Markets.

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

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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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