Bulls n Bears Daily Market Commentary : 03 April 2024

Thu Apr 4 00:32:20 CAT 2024

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Bulls n Bears Daily Market Commentary : 03 April 2024

 <mailto:sales at dulys.co.zw?subject=Request%20Quote> 
ZSE commentary

ZSE maintains positivity but focus remains on upcoming MPS

HARARE - Zimbabwe Stock Exchange shares maintained positivity on Wednesday
amid heightened anticipation of the new measures set to be presented soon
that are largely expected to foster pricing stability in the face of the
runway depreciation of the local currency and the expected economic weakness
due to the impact of the drought. 

President Emmerson Mnangagwa this morning declared a state of disaster due
to the effects of the drought as he put up a US$2 billion requirement to be
used on various measures that will mitigate against food insecurity and
climate change. This has been legislated through Statutory Instrument 55 of
2024, which was gazetted this afternoon.

But investors' eyes are on the upcoming monetary policy statement, with
reports that the local currency continues to rapidly depreciate in the
alternative market amid a ZWL liquidity shortage as traders take a cautious
approach. The ZWL was quoted at 40 000 on the alternative market.

Despite the sustained positive trajectory, the stock market valuation
remains underwhelming in real terms.  At close, the All Share Index was
1.35% higher to 915 716.53 in a session, which yielded 14 risers against six
losers. Market capitalisation was $74.13 trillion.

Turnover was at $3.19 billion after 1.86 million shares exchanged hands.
Econet contributed the most to the value at $1.32 billion, while OK Zimbabwe
had the most volume at 557 000 shares. Total trades were fairly okay at 366.
Foreigners sold $1.32 billion worth, mostly out of Econet, and bought an
insignificant number.

The Top Ten Index put on 1.03% to 414 843.38. CBZ added 11.99% to 1 119 900c
in a low volume trade of 300 shares, while small gains were seen in Delta
and EcoCash. Econet was the weakest link among the heavyweights after it
closed 4.14% lower to 7 200c.

The Medium Cap Index rose 1.92% to 3 327 958.72. FMP and Nampak were the
day's top risers after they hit limit up to 64 400c and 88 550c
respectively. 

CFI rose 14.98% to 343800c. The group recently said that turnover in the
five months to February increased by 848% in historical terms to ZWL$286.5
billion. Of this total turnover, the retail division albeit being flat in
the period accounted for 66% followed by Victoria Foods at 23%. Agrifoods
and Glenara contributed 7% and 2% respectively.

Zimre Holdings rose 14.86% to 44 566.39c taking its year-to-date gain to
141.62% and Willdale added 12.24% to 11 000c ahead of its EGM tomorrow,
where it will seek approval for land deals that are key to its
recapitalisation.

OK Zimbabwe was near flat after it launched its US$1 million annual
promotion. The group has now added OK Mart to its participating stores.

Ariston was the session's worst performer, losing 11.23% to 6144.15c,
Proplastics declined 6.86% to 120515.35c and marginal losses were seen in
Turnall (-1.37%) and Seed Co (-0.14%).

On the VFEX, the All Share added 0.33% to 100.68. First Capital Bank led the
risers with a 9.16% gain to 2.86 US cents while there were fractional gains
in National Foods (+0.78% and Padenga (+0.30%).

Turnover was moderate at US$161 316 after 436 429 shares traded. Simbisa led
in both turnover and volume at US$120 287 from 343 683 shares.finx

Global Currencies & Equity Markets

Nigeria

Why Nigeria's currency is rebounding against the dollar

Nigeria's naira is recovering from record lows hit this year, following
interventions by its central bank through interest rate rises and the direct
sale of dollars to foreign exchange bureaus.

The naira closed at 1,278 per dollar on April 2, compared to over 1,500 in
February, according to the Lagos-based FMDQ exchange that tracks trading
data.

Investment management firm Cardinal Stone said in a note last week that the
naira had strengthened by 11.4% in official markets since the start of
March, making it one of Africa's top-performing currencies. It said foreign
inflows into Nigeria had increased by $2.1 billion so far this year,
compared with $1.6 billion in 2023.

The recovery comes after the currency's value plummeted in the wake of
economic reforms imposed by President Bola Tinubu's administration after he
took office last May. He removed a fixed currency peg and scrapped a system
of multiple exchange rates, instead allowing the naira's value to be market
determined. The exchange rate was about 755 naira to the dollar in the two
weeks after Tinubu took office, but crossed 1,000 naira to the dollar by the
end of 2023.

The Central Bank of Nigeria (CBN) has devalued the naira twice in the last
year, most recently in January, and hiked the benchmark interest rate by 600
basis points since February to 24.75% to tackle galloping inflation.

Some of the inflationary pressure has been caused by foreign exchange
problems. Nigeria has faced dollar shortages in recent years following
revenue shortfalls from the oil industry, partly caused by pipeline
sabotage.

The CBN currently sells $20,000 to licensed bureau de change traders at a
fixed price each week, restoring a policy suspended in 2021. It is also
selling more dollars to deposit banks, while revising their codes of
operation. Banks operating internationally will now require 500 billion
naira ($353 million) as their capital.

Nigeria's currency depreciated so quickly between October and February that
projections of one dollar to 2,000 naira by the end of this year's first
quarter were common and seemed inevitable. The country's dependence on
dollar-denominated imports - especially of petrol, the price of which
affects everything from food to transportation - triggered fears of higher
inflation and more dire effects on the cost of living.

The central bank's interventions appear to have been well timed. Apart from
the lower exchange rates, the gap between the official and parallel market
exchange rates are smaller, indicating less demand for dollars outside bank
channels.

Some of the reduced demand may be seasonal: Peak dollar demand for the over
70,000 Nigerians studying abroad occurs in the months leading up to the
beginning of fall and winter semesters in North America. But an overall
aggressive approach from the CBN, which has included clamping down on
cryptocurrency exchange Binance for supposedly amplifying the naira's
weakness by fueling demand for the dollar-pegged USDT coin, has achieved
some stability.

That said, the CBN's defense of the naira will have its costs. The bank gets
the dollars it sells to currency changers from Nigeria's forex reserves,
partly funded by dollar receipts from the sales of bonds and treasury bills.
Interest to be paid on treasury bills auctioned in the first three months of
this year is estimated at 1.01 trillion naira ($777 million).

South Africa

South African rand slips against the dollar   

South Africa's rand slipped early on Wednesday, as focus in the absence of
local economic data shifted towards a speech by US Federal Reserve Chair
Jerome Powell for clues on the timing of potential interest rate cuts.

At 0821 GMT, the rand traded at 18.8425 against the dollar, 0,4 percent
weaker than its previous close.

The dollar index was broadly steady against a basket of currencies.

Investors will be closely watching Powell's speech later on Wednesday for
clues on his stance on the interest rate landscape.

South Africa has no major domestic economic releases due until Thursday when
S&P Global will release its whole-economy purchasing managers' index survey,
shedding light on business conditions in Africa's most industrialised
economy.

On the stock market, the Top-40 and the broader all-share indices were both
0,6 percent lower in early trade.

South Africa's benchmark 2030 government bond was marginally stronger in
early deals, with the yield down 0,5 basis point to 10,625 percent. -
Reuters

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar dips while jawboning supports yen

(Reuters) - The U.S. dollar was down on Tuesday after earlier hitting its
highest in almost five months, following a new report that showed U.S. job
openings held steady at higher levels in February.

The Japanese yen was last up at 151.605 per dollar, after earlier dipping to
151.79. It has traded in a tight range since reaching a 34-year trough of
151.975 on Wednesday, which spurred Japan to step up warnings of
intervention.

The dollar index rose to 105.1 on Tuesday, its highest level since Nov. 14,
adding to sharp gains on Monday after U.S. data unexpectedly showed the
first expansion in manufacturing since September 2022, causing traders to
pare rate bets.

The dollar index last stood at 104.81, down 0.181% after a report from the
Labor Department showed that job openings edged up to 8.756 million on the
last day of February, slightly higher than expectations, as traders also
digested a February increase in factor orders.

The Commerce Department's Census Bureau on Tuesday said new orders for
U.S.-manufactured goods rebounded more than expected in February, boosted by
demand for machinery and commercial aircraft as manufacturing regains its
footing.

Monday's U.S. ISM manufacturing survey data featured a sharp rise in a
measure of prices in the sector, adding to investors' concerns that
inflation will be slow to fall back to 2%, delaying the Federal Reserve's
first rate cut.

"Really the dollar over the last nine months or so has been driven by Fed
policy expectations -- when the probability of a cut increases sooner, the
dollar tends to weaken, and vice versa," said John Velis, Americas macro
strategist at BNY Mellon.

Fed Chair Jerome Powell on Friday said the central bank was in no hurry to
lower borrowing costs after data showed a key measure of inflation rose
slightly in February.

On Tuesday, Japanese Finance Minister Shunichi Suzuki reiterated that he
would not rule out any options to respond to disorderly currency moves.

Japanese authorities intervened in 2022 when the yen slid toward a 32-year
low of 152 to the dollar.

The yen's decline has come despite the Bank of Japan's first interest rate
hike since 2007 last month, with officials cautious about further tightening
amid a fragile exit from decades of deflation.

"The fact that they didn't last week to me suggests that it's going to take
a break above 152 for Japanese policymakers to start getting involved, and
in retrospect, I think maybe that's prudent of them because intervention
loses its significance each time you enter the market," said Matt Weller,
head of market research at StoneX.

Still, officials are "wary of backing themselves into a corner by drawing a
line in the sand at 152," said Nicholas Chia, Asia macro strategist at
Standard Chartered.

"The rationale of jawboning and intervening in FX markets is mainly to buy
time for the JPY in the hopes that USD strength wanes and recedes," he said.

Elsewhere, China's yuan fell to a 4-1/2-month low as a strong dollar offset
selling of the U.S. currency by state-owned banks. The yuan fell to a low of
7.2364 per dollar on the day, its weakest level since mid-November.

The euro fell to its lowest since mid-February at the end of the Asian
session but was last up at $1.0763 . Data on Tuesday showed that the euro
zone factory downturn deepened again in March.

Sterling ticked up from near its lowest since December to $1.2569 after data
showed its manufacturing sector brightened last month.

Bitcoin declined 5.36% to $66,027 after earlier declining to as low as
$64,550.

The Swiss franc hit its lowest since the start of November at 0.909 to the
dollar. It has dropped around 2.5% since the Swiss National Bank
unexpectedly cut interest rates on March 21.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price rises above $2,300, shattering all-time high

Gold rose to another record after Federal Reserve Chair Jerome Powell
signaled policymakers will wait for clearer signs of lower inflation before
cutting interest rates.

Powell said recent inflation figures - though higher than expected - didn't
"materially change" the overall picture, according to the text of a speech
at Stanford University in California. He reiterated his expectation that it
will likely be appropriate to begin lowering rates "at some point this
year."

Treasury yields and the dollar pushed lower, boosting bullion by as much as
0.6% to a new all-time high of $2,295.25 an ounce.

US gold futures, meanwhile, crossed the $2,300 mark, up 1.4% at $2,313.60
per ounce.

While Powell reiterated the Fed's wait-and-see approach before lowering
borrowing costs, the US central bank's path to cut rates is unchanged
despite recent inflation figures.

That's "very gold positive as it suggests that the Fed will cut
significantly before the inflation target is reached," said Bart Melek,
global head of commodity strategy at TD Securities, in a Bloomberg note.

Investors are still expecting a first rate cut at the Fed's June 11-12
policy meeting, even as the stronger recent economic data has sown investor
doubts about that outcome.

The US jobs report for March is due to be released on Friday, with new
inflation data coming next week.

A pair of Federal Reserve policymakers said on Tuesday they think it would
be "reasonable" for the US central bank to cut interest rates three times
this year.

"The likelihood of rate cuts is still there, but the data is still really
strong. This is an election year, so I don't think the Fed will want to be
held accountable for any kind of market crash," Daniel Pavilonis, senior
market strategist at RJO Futures, told Reuters.

Gold, a hedge against inflation and a safe haven during times of political
and economic uncertainty, has climbed over 11% so far this year, helped by
strong central bank buying and safe-haven demand.

Despite the metal's scorching rally, gold's biggest producers remain
somewhat muted in recent trading sessions. Newmont, for example, edged only
0.6% higher by midday Wednesday.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

Independence Day

April 18

Workers day

1 May

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

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
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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.

 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27
79 993 5557 | +263 71 944 1674

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