Bulls n Bears Daily Market Commentary : 14 August 2024

Thu Aug 15 08:39:58 CAT 2024

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Bulls n Bears Daily Market Commentary : 14 August 2024

ZSE commentary

ZSE scratches gains post heroes holidays...

The ZSE market scratched gains post the heroes holiday as three of the four
indices we review closed pointing northwards. The All-Share Index eked out
negligible gains of 0.08% to 201.96pts while, the Mid Cap Index added 0.67%
to settle at 177.26pts. The Agriculture Index advanced 1.48% to 190.52pts
while, on the contrary the Blue-Chip Index was 0.28% weaker at 208.13pts.
Seed technology group SeedCo Limited led the gainers of the day as it ticked
up 14.46% to $3.9596, trailed  by Ok Zimbabwe  that  garnered  5.69% to
$0.8970. Banking group NMB edged up 5.48% to $3.1644 while,
telecommunications group Econet gained 2.96% to end at $3.5000. Sugar
processor Star Africa firmed up 2.04% to end trading at $0.0100. Partially
weighing down the market was digital media group Zimpapers that fell 16.52%
to $0..0460, followed  by banking group  FBC that plummeted 14.64% to
$3.5000. Agriculture concern Ariston slipped 1.71% to close trading at
$0.0400 while, cigarette producer BAT lost 1.16% to end at 45.0000, where
demand could be  found. Willdale capped the top five worst performers list
of the day on a 0.65% retreat to $0.0330.

Activity aggregates were mixed in the session as turnover increased by
48.86% to 4.31m shares while, volume traded fell by 2.74% to 1.37m. The
threesome of Zimre Holdings Limited, Ok Zimbabwe and Delta drove the volume
aggregates of the day as they contributed a combined 77.7% of the total
outturn. In the ETF category, a total of three funds registered trades in
the session. The Datvest MCS was 1.19% lower at $0.0296 while, the Old
Mutual Top 10 ETF parred off 0.44%.to $0.1767. The Morgan & Co Multi Sector
ETF was 4.17% higher $0.5000 as scrappy 400 shares exchanged hands in the
session. In the REIT category the Revitus REIT was 6.39% higher at $0.6725
while, the Tigere REIT rose 0.52% to $1.0603 as 8,300 units traded in the
session. Elsewhere, Tigere has issued a circular advising shareholders that
it will hold an EGM on 29 August for the purpose to seek approval to
purchase highlands Park Phase 2 for $11,294,810 through an issue of new
351,282,000 Tigere Units.

VFEX recovers in Wednesday's trades ...

The VFEX market recovered in Wednesday's trades as it rebounded by 0.26% to
103.85pts. Mining company Caledonia led the gainers of the day as it soared
5.00% to $14.7000 while, hotelier African Sun was 2.29% higher at $0.0358.
Fast foods group Simbisa charged 1.10% to $0.3500. Partially weighing down
the market was Seedco International that dropped 0.44% to $0.2700. The duo
of Padenga and. lnnscor slumped a similar 0.06% to settle at $0.1649 and
$0.4655 respectively.

Activity aggregates faltered in the session as volumes traded fell by 29.07%
to 703,406 shares while, value traded dipped 65.52% to $112,393.11. First
Capital, African Sun, Simbisa and lnnscor drove the activity aggregates of
the day as they claimed 35.19%, 28.26%, 16.07% and 15.27% respectively. In
the turnover category, activity was mainly skewed towards lnnscor and
Simbisa that claimed a combined 79.69% of the total value traded.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African rand muted ahead of local data releases

(Reuters) - South Africa's rand was little changed early on Wednesday, ahead
of the release of local business confidence and retail sales data.

At 0659 GMT, the rand traded at 18.1025 against the dollar, near its
previous close.

The South African Chamber of Commerce and Industry will release business
confidence numbers for June and July at 0930 GMT.

June retail sales data from Statistics South Africa is due at 1100 GMT.

On the stock market, the Top-40 index was up 0.1% in early trade.

South Africa's benchmark 2030 government bond was stronger in early deals,
with the yield down 3 basis points to 9.235%.

Zambia

Zambia central bank holds key rate, citing impact of drought

(Reuters) - Zambia's central bank kept its benchmark lending rate unchanged
on Wednesday, saying that although inflation remained high its stance was
appropriate given the economic impact of a severe drought.

The decision to hold the Monetary Policy Rate at 13.50% follows six
successive meetings at which it was raised. So far this year the Bank of
Zambia has implemented a 100 basis point hike in May and a 150 basis point
increase in February.

"While actual and projected inflation remain elevated relative to the 6%-8%
target band, the committee judged that the current monetary policy stance is
appropriate," central bank Governor Denny Kalyalya told a news conference.

Inflation has been rising since the middle of last year, reaching 15.4% year
on year in July, fuelled by a slide in the kwacha currency and the worst
drought in the southern African region in decades.

The central bank now anticipates inflation will average 15.3% in 2024, up
from the 13.7% forecast it gave at its last policy meeting in May.

Kalyalya said the completion of Zambia's external debt restructuring and
implementation of structural reforms remained critical to lower inflation.

Weighed down by delays in restructuring talks and limited foreign-currency
inflows, the kwacha hit repeated record lows against the dollar from
November to February and has been highly volatile since.

"In taking the decision to maintain the Policy Rate as opposed to raising
it, the committee also took into account the impact on the stability of the
financial system and growth, particularly in 2024, in the wake of the
drought," Governor Kalyalya said.

 <mailto:info at bulls.co.zw> 

Global Markets

The Chinese Yuan Will Never Replace the US Dollar as the World's Reserve
Currency

It has recently been in the news that Saudi Arabia is in talks to price its
oil sales in the Chinese currency, the Yuan.  While some countries support
the Yuan becoming the world's reserve currency, economic reality dooms this
effort before it can even begin.

How the US Dollar Became the World's Reserve Currency

Since the Bretton Woods Conference in 1944, the US dollar has been the
world's reserve currency.  At first, the dollar was the world's reserve
currency based on the amount of gold held by the US Treasury.  At the end of
World War Two, the United States held the largest gold reserves in the
world.  Other countries accumulated US treasury securities in lieu of US
dollars to support their currencies

As the United States involvement in Vietnam dragged on, and as the United
States ran massive deficits, countries became nervous holding US securities
based on the gold reserves of the United States.  Countries began to cash in
their US securities for gold, which began to deplete the gold reserves held
by the United States.  This reality forced then President Richard Nixon to
take the US dollar off of the gold standard, and evolve the dollar into a
fiat currency.  Following the lead of the United States, other nations
changed to a fiat currency, and today every country in the world has a fiat
currency. 

Even with the United States going into a fiat currency, the US dollar has
still remained as the world's reserve currency. 

Fiat currency depends on the perception of the overall wealth, and power of
any individual country; and in every aspect of value and strength, the
United States stands alone.

The Fundamental Strengths of the United States

Part of the reason for the apparent durability of the United States to
maintain its great power status is its geographical location. With an ocean
on both coasts, friendly nations to its north and south, and a climate that
provides some of the best farmland in the world.  Coupled with navigable
rivers which provides ease of transportation of goods and services from its
heartland, the United States is blessed with natural advantages. In
addition, the United States is energy independent thanks to the development
of oil fracking.  This does not take into account the 4.2 trillion barrels
of oil in the Green River Formation that has yet to be tapped.

An additional reason for U.S. staying power is the enduring legacy of the
U.S. Constitution, which so far has provided for a stable transfer of
political power between various political antagonists, notwithstanding the
riot and possible attempt at insurrection on January 6, 2021. With its
history of stable courts and a friendly business environment, the United
States has been an oasis of stability in the world so far.

Combined with the physical and non-physical advantages discussed above, U.S.
demographics provide an internal manufacturing and consumer market advantage
that no other nation has. While it is true that the annual growth rate of
the American population is approaching stagnation levels, it can be argued
that the previous Trump administration depressed demographic growth by
severely limiting immigration. Coupled with the Covid-19 pandemic, the
growth rate for the American population is anemic. Current estimates of
demographic growth range from between 376 million to 404 million people by
2060. However, this would still make the United States a major manufacturing
and consumer market.  This is a demographic advantage no other country has.

The People's Republic of China

It is a popular bit of wisdom that China is the up-and-coming superpower,
and that the United States is a nation in decline. While it is a popular
saying, a cold and sober examination of the facts about China, the economic
challenges that China faces, China's lack of natural resources, as well as
the aging demographics of China, casts a sobering picture for the future of
the People's Republic of China.

While many people rave about China's economic growth, and businesses'
prostitute themselves to try and tap China's internal market, very few pay
attention to the massive amount of debt that is an impending disaster for
the Chinese economy, and the danger that such a collapse could cause.
Estimates of Chinese debt are to the order of $28 trillion. China's debt to
GDP ratio is 282 percent of GDP. It is thought that due to shadow lending,
the percentage of debt may be even higher.

Geopolitician Peter Zeihan compares and contrasts the idea of money between
the United States and China. In the United States, money is regarded as an
economic good. In China, money is regarded as a political good. In the
United States, money has value in and of itself. In China, money is a
political good, and only has value if it can be used to achieve a political
goal. The concepts of rate of return or profit margins do not exist in
China, and therein lies the danger; eventually the law of supply and demand
will win out, and the Chinese economy will have to face a correction.  The
longer it takes to face this economic correction, the greater damage that
the inevitable correction will cause to the Chinese economy.

While the United States has an open economy, and money can be moved into and
out of the United States at will, The Chinese government imposes capital
control over moving money out of China. 

By restricting the flow of capital in and out of China, investors risk
losing all of their wealth should a political crisis develop that leads to
an economic crisis or spiral into armed conflict. 

When the bare bone facts are examined, the advantages of the US dollar over
the Yuan is enormous.  Any rational economic actor would rather have their
money in the United States, than in China.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips 1% as large rate-cut hopes dim after US CPI data

(Reuters) - Gold prices fell 1% on Wednesday after data showed U.S. consumer
prices rebounded as expected in July, pouring water on expectations for a
sizeable rate cut from the Federal Reserve next month.

Spot gold fell 1% to $2,440.47 per ounce by 01:45 p.m. EDT (1745 GMT). U.S.
gold futures settled 1.1% lower at $2,479.70.

"A September cut is a mortal lock; at the moment the data is suggesting the
Fed will start with 25 bps which would be a disappointment to the market
which likes to overshoot," said Tai Wong, a New York-based independent
metals trader.

The U.S. consumer price index increased 0.2% last month, after falling 0.1%
in June, the Labor Department's Bureau of Labor Statistics said. In the 12
months through July, the CPI increased 2.9%, after advancing 3% in June.

Markets now see a 36% chance of a 50-basis point rate cut by the Fed in
September versus that of 50% prior to the release of U.S. CPI data,
according to the CME FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding the non-yielding
bullion.

"Expectations now have shifted back in favor of just a 25 basis point cut,
so that could be taking some of the momentum away from the gold market,"
said Phillip Streible, chief market strategist at Blue Line Futures.

Atlanta Fed President Raphael Bostic said on Tuesday he wanted to see "a
little more data" before he was ready to support lowering interest rates.

"We are still in an environment of significantly elevated geopolitical
tensions which always benefits gold," said Ben Hoff, head of commodity
strategy at Societe Generale.

Non-yielding gold has risen 19% so far this year after spot prices touched a
record high of $2,483.60 on July 17, owing to firm safe-haven demand and Fed
rate-cut expectations.

Elsewhere, spot silver fell 2.1% to $27.26 and platinum dipped 1.3% to
$923.95. Palladium was down 1.2% at $927.25.

INVESTORS DIARY 2024

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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DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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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
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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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