Bulls n Bears Daily Market Commentary : 05 April 2024

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Bulls n Bears Daily Market Commentary : 05 April 2024

 

 	

 

 

 	


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

 

Edgars to ramp up production at Carousel as it lists on VFEX

VICTORIA FALLS - Edgars Stores Limited completed its migration to the
Victoria Falls Stock Exchange (VFEX), on Friday, to become the 15th counter
on the United States Dollar denominated bourse.

This comes at a time the group is working on installing new equipment at its
Carousel factory to ramp up garment production from 35 000 units per month
to 100 000 units per month before the end of the year.

Edgars Group becomes the first clothing business to list on the
fast-expanding VFEX after shareholders overwhelmingly approved the delisting
from the Zimbabwe Stock Exchange recently.

The listing ceremony took place this morning, where Director of Commerce and
Consumer Affairs in the Ministry of Industry and Commerce Netai Loice Magade
represented Minister Nqobizitha Ndlovu as the guest of honour.

The Minister said the migration to the VFEX is therefore a manifestation of
the diligent planning and the hard and dedicated work that the group has
implemented over the years. "I am delighted to be witnessing listing of this
15th counter on the Victoria Falls Stock Exchange. 

 

"The migration to this counter is indeed a show of confidence in the
policies of the Second Republic and dovetails with Government trajectory to
attract much-needed capital. 

 

"This listing of the retail outlet will have numerous benefits to the
economy, which include the creation of new jobs and enhanced market value.
It is going to attract significant interest in the market from both local
and foreign investors," said the Minister.

Carousel is producing 35 000 units of garments per month from 7 000 they
previously produced and the figure is set to increase to 100 000 units per
month by end of the year when the envisaged new equipment is installed.

The growth is driven by growth in the commercial sector despite challenges
faced by the formal retail sector including price escalations, exchange rate
instability, power outages, and subdued consumer demand, as well as influx
of second hand clothing.

 

Minister Ndlovu said Government intervened with a raft of measures aimed at
bringing normalcy in the market place including a tight monetary policy and
improving power generation.

Government put in place SI 122 of 2017 to regulate the importation of second
hand clothes but still faces challenges posed by porous borders.

"Government has made significant strides in improving the business
environment by implementing the Ease and Cost of Doing Business reforms,
which spurred the economy towards the US$8 000 manufacturing and commercial
sector that was achieved at the end of 2023.

"As you may be aware the Ministry is currently reviewing the
Cotton-to-Clothing Strategy with a view to further strengthening that whole
value chain, which covers the clothing and fashion industry. It is therefore
befitting that we collectively recognise and incentivize industry and
commerce so that they realize their full and optimal potential. 

 

"Government also notes that unfair competition from the informal sector is
threatening some retail businesses, including the clothing retail sector,
which is also negatively affected by illegal imports of second-hand
clothing, and efforts are underway to come up with technology driven
surveillance aimed at curbing smuggling," said Minister Ndlovu.

He said migration by Edgars Group is a key initiative by the private sector
that complements government efforts to grow the economy and uplift the
standard of living for the populace.

He challenged the retail sector to strengthen its linkages with the
productive sectors of the economy to promote a culture of manufacturing in
Zimbabwe for local consumption.

 

This will further increase capacity utilisation at the company and also
contribute in further growing manufacturing sector capacity utilisation from
the current 60 percent. 

 

Nationally, the commerce sector has experienced robust growth over the last
few years, and indications are that it will continue to grow.

The listing comes against the backdrop of the opening of a top-market 27th
Edgars Store in Bulawayo. Edgars Group, which was listed on the ZSE in 1974,
comprises Edgars Stores, Jet, Carousel, Club Plus and Express Stores.

The group board chair, Themba Sibanda said local currency instability and a
desire to access the offshore capital market inspired the migration.

"VFEX will solve that problem for investors by being in a currency that is
stable. That is the advantage you get when you list on VFEX and we hope our
shareholder will be happy with that and also the long term ability to go on
the capital market offshore," he said.

VFEX was launched in October 2020, and is a subsidiary of the Zimbabwe Stock
Exchange. It was established to kick-start the Offshore Financial Services
Centre (OFSC) earmarked for the special economic zone in Victoria Falls.

The retail group joins African Sun Limited, Axia Corporation Limited,
Bindura Nickel Corporation Limited, Caledonia Mining Corporation, First
Capital Bank, Innscor Africa, KARO Mining Holdings, National Foods Limited,
Nedbank Group Limited, Padenga Holdings, Seedco International, and Simbisa
Brands Limited that have listed since the launch of VFEX 17 months ago in
October 2020.

ZSE board chair, Caroline Sandura said VFEX has witnessed diversified
counters spanning the hospitality, real estate, retail, distribution,
financial services, mining, and manufacturing sectors.

She said listing on VFEX unlocks a wealth of benefits, including the ability
to raise capital in hard currency and through a variety of financial
instruments; increased investor attraction due to lower trading costs and
tax incentives for your shareholders; strategic listing placement for future
opportunities given VFEX is earmarked to sit in the Offshore Financial
Services Center; and enhanced visibility to a wider pool of global
investors.-finx

 

 

 

 

Global Currencies & Equity Markets

 

 

 



South Africa

 

South African rand firms against dollar, stocks drop

(Reuters) - South Africa's rand held onto its recent gains against the
dollar on Friday in the absence of major local economic data releases.

At 1504 GMT, the rand traded at 18.6925 against the dollar , 0.1% stronger
than its previous close.

The dollar index was last trading up about 0.13% against a basket of
currencies after data showed U.S. employers hired far more workers than
expected in March, potentially delaying expected interest rate cuts from the
Federal Reserve this year.

Advertisement . Scroll to continue

South Africa had no major domestic economic releases due on Friday. Investor
focus will turn towards monthly reserves, manufacturing and mining figures
next week.

On the stock market, the Top-40 (.JTOPI), opens new tab index closed down
0.75%, while the broader all-share (.JALSH), opens new tab index ended 0.79%
lower.

South Africa's benchmark 2030 government bond was weaker, with the yield up
9 basis points to 10.525%.

Get a look at the day ahead in U.S. and global markets with the Morning Bid
U.S. newsletter. Sign up h

 

 

 

Nigeria

 

Naira appreciates N351 against Dollar at forex in one month 

 

The Naira appreciated N351.12 against the US Dollar in the foreign exchange
market in the last one month.

 

This is according to FMDQ data on the dollar exchange rate from March 8 to
April 5 2024.

 

Accordingly, the country's currency gained N351.12 by appreciating to
N1251.05 per Dollar on Friday from N 1,602.17 on March 8, 2024.

 

The figure represents a 21.9 per cent appreciation in the reference period.

 

The development showed that the Naira has continued its appreciation since
last month.

 

The Director of the Centre for the Promotion of Private Enterprise, Muda
Yusuf, had attributed the sustained gain of Naira at the FX market to the
Central Bank of Nigeria's recent forex reforms.

 

Meanwhile, Nigerians have yet to see a significant impact on the country's
soaring inflation, which increased to 31.7 per cent in February.

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

US Dollar holds daily gains after March's NFP

The US Dollar Index (DXY) is currently trading at 104.30, trimming steep
initial gains on Friday following a surprising beat from the Nonfarm
Payrolls (NFP) report. The strong labor market scene, underscored by the
better-than-anticipated NFP report for March, solidifies the Dollar's
bullish outlook. That being said, the odds of a rate cut in June from the
Federal Reserve (Fed) remain high and steady.

 

US Economic data will continue to guide the timing of the Fed's easing
cycle, with consensus still pointing to a June initiation. Next week,
markets will eye Consumer Price Index (CPI) figures for March.

 

 

Daily digest market movers: DXY soars as labor market data exceeds
expectations

The US Bureau of Labor Statistics (BLS) announced an increase of 303K in
March jobs, which greatly surpassed the expected 200K.

February's previous NFP growth of 275K was revised downward to 200K.

There was a minor drop in the Unemployment Rate from 3.9% to 3.8%.

The Labor Force Participation Rate witnessed a slight bump from 62.5% to
62.7%.

The annual rate of wage inflation, illustrated by Average Hourly Earnings,
was adjusted down to 4.1%, aligning with forecasts.

Regarding the Fed's stance, officials from the Fed are advising patience
before decreasing rates, delivering a mild reinforcement for the USD. 

Regardless of this, the market continues to project a June rate cut at
around a 70% likelihood, followed by an approximated total easing of roughly
75bps this year.

US Treasury yields are rising with the 2-year yield at 4.70%, the 5-year
yield at 4.35%, and the 10-year yield at 4.36%. 

DXY technical analysis: DXY manifests bullish momentum domination in
short-term outlook

As the indicators on the daily chart reflect, the DXY indicates a positive
inclination with a favorable tilt on the Relative Strength Index (RSI). The
RSI is currently exhibiting a positive slope in positive territory, which
echoes the bullish force's dominance over selling pressure in the immediate
scenario. Meanwhile, the Moving Average Convergence Divergence (MACD),
despite having flat green bars, still supports the bullish prospects.

 

Furthermore, the index position concerning its Simple Moving Averages (SMAs)
further corroborates this assertion. The DXY positioning above the 20, 100,
and 200-day Simple Moving Averages (SMAs) suggests the bulls are asserting
their control. As long as the index remains above these levels, the buyers
have reason to remain optimistic.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold Junior gold and silver stock trains are leaving the station

Despite a multi-month high in the U.S. dollar and rising Treasury yields,
Gold Futures posted an all-time high at $2238 at the end of Q1. This
significant event has shifted risk to the upside in the precious metals
complex. 

 

Heading into the first week of Q2, the rising USDX has clearly lost its grip
on the gold market as U.S. government debt continues to spiral higher, now
adding $1 trillion more every 100 days with interest payments surpassing
entitlements.

 

Technically, the gold price and moving averages are currently in bullish
sequence. We are witnessing a strong breakout following a major
consolidation below key resistance at $2100 lasting 43-months, despite the
stronger greenback. The price of gold has risen nearly 10% this year, while
the 10-year U.S. Treasury yield has gained 10.4%. 

 

With this critical multi-year overhead resistance now being eliminated, gold
continued its relentless move higher this week after momentum hedge funds
entered the gold space to actively take positions in Gold Futures for the
first time since leaving in mid-2020. 

 

On Wednesday, an overbought USDX reversed lower when reaching key resistance
at 105 on dovish comments from Fed Chair Powell who stated it will be
appropriate for the Fed to cut interest rates "at some point this year." 

 

Yet, extreme overbought gold rose to another record above $2300 despite
Powell signaling that policymakers will wait for clearer signs of lower
inflation before cutting interest rates.

 

After a technical breakout in gold was confirmed with a monthly/quarterly
March close above $2100 last Thursday, this strong advance is set to
continue with an initial 13-year cup & handle breakout target of $2500, and
Fibonacci measurements being $2460 and $3300. 

 

Geopolitical tensions have played a major role in accelerating the demand
for gold as a safe-haven asset. As conflicts in Ukraine and Palestine
continue, the potential escalation to other countries hangs over the markets
like the sword of Damocles during a heated presidential election year in the
U.S. Meanwhile, the four-year long wait for inevitable interest rate cuts in
the U.S., EU, and UK come closer to fruition as inflation remains sticky.

 

With cracks beginning to appear in both the A.I. sector and bitcoin
parabolas, the fundamental backdrop remains ultra-bullish for the safe-haven
metal due to an ever-growing number of macro and geopolitical factors that
are currently unfolding. 

 

These include; persistent geopolitical tensions, strong central bank
purchases, growing demand from China as a hedge against economic instability
in the world's second-largest economy, along with November's high-stakes U.S
presidential election. 

 

To understand the importance of this major breakout in gold, we should let
history be our guide as to what we should expect from the ancient metal of
kings going forward.

 

During the current secular gold bull, which began at the turn of the
century, this is the second time bullion has experienced an important
breakout from a more than decade-long cup & handle formation.

 

>From 1995 into 2005, the gold price produced a similar uber-bullish
technical set-up, when the safe-haven metal took 9-years to form a cup below
resistance at $450 per ounce. The subsequent handle took 2-years to
complete. After a monthly close above the psychologically important $500
level in mid-2005, the gold price reached $1925 by September 2011.

 

Although the setup in gold is incredibly bullish after this recent
significant breakout, the silver space only this week began to show signs of
joining gold's bullish momentum. Trader's attention is now starting to turn
to silver on rising expectations that the metal will be next to hit new
record highs.  

 

Until this week, there was stiff overhead resistance in silver at $26. Last
week's outperformance of gold stocks in relation to the cheaper precious
metal into quarter-end, defying expectations amidst a backdrop of climbing
Treasury yields and a resilient U.S. Dollar, was a good indication that
silver would move through this strong line of resistance to begin the month
of April. And indeed, it has this week.

 

The strong rally in silver above stiff 2-year resistance at $26 on
Wednesday, means its role as an inflation hedge and safe-haven asset has
returned after a 4-year hiatus despite the challenges posed by rising bond
yields and a strengthening U.S. dollar. 

 

After becoming more of an industrial metal over the past several years,
silver's safe-haven component is re-affirming its appeal amid geopolitical
tensions. Last week, the Gold/Silver ratio had moved up to 90 which has been
strong resistance for the past 2-years.

 

In the recent past, this closely followed ratio has required a trending move
lower below 80 to signify silver was ready to join the gold party. The
Gold/Silver ratio closed at 85 on Thursday, meaning silver still has plenty
of catching up to do.

 

Although the gold price is just 30% from its adjusted for inflation all-time
high of just over $3000, silver trading at $27 is not even close to its
inflation adjusted high of nearly $150 per ounce.

 

Over the past 4-years, both silver and precious metals mining stocks have
woefully underperformed the gold price, which has gold and silver equities
presenting the best value proposition seen since January 2016. 

 

After calling your attention in this space last month to the probability of
a gold stock mean-reversion beginning to unfold, the HUI/Gold ratio has
moved sharply higher since then. This closely followed index shows gold
stocks quickly rising from the dead after becoming the cheapest in relation
to the gold price since a major bottom at $1045 per ounce was formed 8-years
ago. 

 

Despite the gold price having more than doubled since then, by early last
month gold miners had moved down to the all-time low at 0.09 reached at the
depths of a major 4-year gold stock selloff into January 2016. 

 

Fueled by the technical breakout in gold being confirmed last Thursday, the
index has moved back above 0.11 this week from a significant double-bottom
and is poised to continue rising. Note that when the 0.09 region was reached
in early 2016, a sharp miner reversal ensued to begin the mean reversion in
gold stocks which saw many juniors move up 3x-5x within 6-months.

 

With precious metals sector risk having shifted to the upside when the major
gold breakout was confirmed last week, the fuse has been lit in a severely
depressed mining space that has a lot of catching up to do after massively
underperforming on average over the past decade. 

 

Historically, cyclical miner bull up-legs after a major breakout in gold,
followed by silver, have lasted up to 3-years (2001-2003, 2005-2007,
2009-20011). 

 

Moreover, generalist investors have yet to arrive at the precious metals
party en masse, evidenced by depressed metal ETF inflows and gold stock
volume still near 20-year lows.

 

This is incredibly bullish, as it means that mainstream investors are still
to come. With wildly overvalued tech stocks and bitcoin coming under
pressure recently, retail investors are beginning to rotate tech stock
profits into historically undervalued mining shares as the gold price is
breaking out of a massive 13-year cup & handle pattern.

 

Once the stock market begins its inevitable correction of outsized gains, in
the A.I. sector and bitcoin in particular, FOMO will eventually switch from
these bubble valuation sectors into the under-owned gold stock complex.

 

However, the biggest leveraged opportunity in the gold complex lies in
quality precious metals juniors which have been ignored by generalists since
2013. The higher-risk junior space typically underperforms the miners on the
downside, then massively outperforms both the metals and its miners during
major 3-year cyclical up-legs.

 

After both GDX and GDXJ constructed solid 15-month bases, many junior gold
and silver stock trains have been leaving the station one by one over the
past several weeks. With both GDX and GDXJ becoming short-term extreme
overbought, many swing-trader mining speculators are in the process of
rotating miner profits into beaten down quality juniors on their respective
watch-lists.

 

The Junior Miner Junky service provides complete transparency into my 

trading activities and teaches investors how to navigate this
high-risk/high-reward sector. Subscribers are provided a carefully
thought-out rationale for buying individual junior stocks, as well as an
equally calculated exit strategy. 

 

 

 

 

 


 

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 

 

 

 Invest Cellphone:            +263 71 944 1674 | +27 79 993 5557 

Email:               bulls at bullszimbabwe.com

Website:            www.bullszimbabwe.com 

Blog:                 www.bullszimbabwe.com/blog

Twitter (X):        @bullsbears2010

LinkedIn:           Bulls n Bears Zimbabwe

Facebook:          www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 



 

 

 	

 

 

 	

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
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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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