Bulls n Bears Daily Market Commentary : 26 August 2024

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Bulls n Bears Daily Market Commentary : 26 August 2024

 

 	



 

 	


ZSE commentary 

 

Heavies and mid cap counters weigh down the ZSE in Monday's trades...

The market faltered in Monday's trades mainly weighed down by heavy and mid
cap counters. The All-Share Index retreated 0.36% to settle at 203 .35pts
while, the Blue-Chip Index was 0.75% lower at 210.27pts . The Mid Cap Index
trimmed 0.71% to end at 176.32pts while, on the contrary the Agriculture
Index was 1.14% higher at 193.35pts. Banking group NMB led the  laggards  of
the  day  as  it plunged  10.00% to  $3.1500, followed by fintech company
Ecocash that parred off 4.56% to settle at $0.4200 . Construction group
Masimba slipped 4.14% to $2.3000 while, agriculture concern Ariston was
2.64% weaker at $0.0438 . Dairy processor Dairibord shed 1.68% to close at
$2.9000 as scrappy 4,200 shares exchanged hands in the name. Partially
offsetting today's losses were ART Corporation that surged 14.87% to end at
$0.2240, trailed by cigarette producer BAT that edged up 13.29% to $45.3165.
Spirit and wines producer AFDIS charged 4.35% to settle at $7.5000 as
property concern First Mutual Properties ended the day pegged at $0.4200,
following a 1.13% gain. Retailer OK Zimbabwe fastened the top five gainers'
list of the day as it ticked up 0.26% to end at a VWAP of $0.9725.

 

Activity aggregates were mixed in the session as volumes traded ballooned
242.72% to 5.29m shares while, turnover plummeted 64.51% to end at $3.92m.
In the volume category, activity was mainly confined in Ecocash that
contributed 68.92%. Other notable volume drivers were Star Africa and
Mashonaland that contributed 12.53% and 10.39% respectively. In the
turnover category, activity was mainly skewed towards Ecocash, BAT and Delta
that claimed a shared 79.87% of the turnover traded. In the ETF category,
the Old Mutual Top 10 ETF was 6.25% weaker at $0.1500. A total of 201,010
units worth $5,595.00 exchanged hands in four ETFs. The Revitus REIT was
4.44% higher at $0.9400 with no trades being registered in the Tigere REIT..

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity 

 

South Africa

 

South African rand slips at start of data-filled week

(Reuters) - South Africa's rand weakened early on Monday, ahead of a slew of
local economic data releases this week, which could give hints on the health
of the local economy.

 

At 0732 GMT, the rand traded at 17.80 against the dollar, 0.51% weaker than
its previous close.

 

The rand, like most emerging market currencies, benefited from a softer
dollar on Friday after comments from Federal Reserve Chair Jerome Powell
solidified bets of a September rate cut.

 

South African investors will focus on monthly producer inflation, money
supply, budget and trade balance data due later this week.

 

On the stock market, the Top-40 index was little changed in early trade.

 

South Africa's benchmark 2030 government bond was weaker in early deals,
with the yield up 2.5 basis points to 9.095%.

 

 

Nigeria

 

Nigeria's battered naira may get a breather on Fed's rate cut

A likely rate cut in the United States may bring much-needed relief to one
of the world's worst performing currencies this year.

 

Nigeria's naira has been under pressure, plunging by almost 100 percent
since the flotation of the local unit last June, allowing the currency to be
determined by market forces.

 

But the latest signal of a rate cut given by Jerome Powell, US Federal
Reserve chief on Friday, August 23, 2024 at the Jackson Hole symposium may
be the respite needed to strengthen the battered naira.

 

Read also: Nigerian businesses expect naira to depreciate in short term -
CBN

 

The Federal Open Market Committee (FOMC), the monetary policy-making arm of
the Federal Reserve System, has held rates steady for the seventh
consecutive time. But with the US inflation within the Fed's target,
lowering monetary policy rate is not unlikely in the coming months.

 

The 71-year-old said "time has come for policy to adjust," adding that "the
direction of travel is clear, and the timing and pace of rate cuts will
depend on incoming data, the evolving outlook, and the balance of risks."

 

Powell's hints of a rate cut sent US Treasuries rallying as the dollar fell,
indicating that investors were anticipating lower interest rates, which
typically increase the value of bonds while decreasing the dollar's
attractiveness compared to other currencies.

 

The rise in euro and yen weakened the dollar index, which measures the
greenback against a basket of six currencies including those two, according
to Thompson Reuters data.

 

The index fell 0.81% from late Thursday to 100.64, having been slightly
firmer before Powell's speech.

 

This development could be a breather for Nigeria's bruised naira whose
depreciation due to recent economic challenges and policy shifts, has
exacerbated inflationary pressures and deepened cost of living for many
Nigerians.

 

 

"A weaker dollar could help ease some of the pressures on the naira," said a
Lagos-based financial expert, stressing that lower interest rates in the US
make the dollar less attractive to investors, leading to a depreciation of
the currency.

 

The Central Bank of Nigeria (CBN) has so far maintained a hawkish position
in its mandate to achieve price stability. It raised the benchmark interest
rate by a combined 800 basis points to 26.75% in less than a year.

 

The apex bank, in its efforts to ensure stability in the foreign exchange
market, sold a record $815 million directly to businesses from manufacturers
to airlines on August 6, the biggest single day intervention under new
governor Olayemi Cardoso.

 

Despite efforts by the Abuja-based bank to shore up the local currency, the
naira has barely budged, closing at 1,570.14 per dollar on Friday at the
Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from
the FMDQ Securities Exchange Limited.

 

"If the dollar weakens as a result of the Fed's actions, the naira might
experience a degree of appreciation or at least a slowdown in its
depreciation," said Ibrahim Bakare, a professor of Economics at Lagos State
University, emphasizing that this could offer some relief to Nigeria's
economic crisis.

 

Economists polled by Reuters are however optimistic that the FOMC may lower
rates by 25 - 50 basis points in their meetings in September and December.

 

A move in September would pivot the Fed away from a restrictive interest
rate policy in place since it started hiking to fight inflation in March
2022, hoisting the fed funds target range from about zero to 5.25%-5.5%,
where it has stood since July 2023.

 

Read also: Naira loses 35.53% to dollar in three months - CBN 

 

"The signal of a rate cut, potentially in September has created a lot of
optimism in the market," said Tobi Ehinmosan, macroeconomic analyst at
Lagos-based FBNQuest Capital, adding that this has sent the dollar tumbling
in recent weeks.

 

"However, what we aren't sure yet is the pace or speed at which the Fed will
cut rates. Personally, I'd think they will cautiously lower rates to
continue monitoring incoming data and price developments," the fixed income
analyst added.

 

 

Analysts say US Fed rate cut may lead to FX stability

 

Analysts have said the September lowering of benchmark interest rates by the
US Federal Reserve could potentially lead to the stability of exchange rate
in Nigeria.

 

This is as "lower US interest rates will push investors to seek higher
yields in emerging markets, which could lead to increased demand for
Nigerian assets and, consequently, support for the naira," said a
Lagos-based investment banker.

 

Ehinmosan, cited earlier, said a weakened dollar would potentially ease the
demand pressure for foreign currency, as the dollar would be less attractive
for investors.

 

"This could translate to relative stability of the Naira. However, the
recent improvement in FX liquidity must still be maintained to achieve
this," he noted.

 

 

US Fed rate cut may ease inflation

 

The potential rate cut is not only expected to bring a breather to the
ailing naira or ensure its stability, it is equally likely to bring prices,
especially imported goods down.

 

Nigeria is contending with a near three decade-high inflation rate at 33.40
percent in July. Even though prices dropped for the first time since late
2022, the rate is well above the CBN's preferred rate.

 

According to Samuel Sule, the chief executive officer of Renaissance Capital
Africa, a US rate cut may provide "the appropriate backdrop" as the exchange
rate stabilises.

 

Given Nigeria's reliance on imported items, a weakened dollar could also
reduce the prices of imported items, said Ehinmosan, noting that a fall in
dollar may fan hope of respite to consumers.

 

 

"We all know that the exchange rate is a significant driver of Nigeria's
core inflation basket. As such, a stronger naira would have a positive pass
through on Nigeria's inflation reading," the macroeconomic and fixed income
analysts said.

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Markets

 

 

Safe-haven yen, US dollar rally on escalating Middle East tension

(Reuters) - The U.S. dollar rallied from an eight-month low on Monday, while
the yen rose against most currencies, as geopolitical tension in the Middle
East intensified, prompting investors to seek safe-haven shelter.

 

Volume was lighter than usual, with UK markets closed for a public holiday.

The Swiss franc also advanced after Israel and Hezbollah fired missiles at
each other over the weekend in one of the biggest clashes in more than 10
months of border conflict.

 

 

"Geopolitical tension, absolutely, is a factor. Israel and Lebanon moved the
market for sure," said Amo Sahota, executive director at Klarity FX in San
Francisco. "Oil prices rallied pretty significantly about 3%. They were down
last Friday, so that recovery has benefited some currencies such as the yen,
Swiss franc, and the Canadian dollar."

In afternoon trading, the U.S. dollar index, a gauge of the dollar's value
against six major currencies, advanced 0.2% to 100.84, rising from its
lowest since late December of 100.53 .

 

 

Against the yen, the dollar was flat to slightly higher at 144.51 . It
earlier dropped to a three-week low of 143.45.

The euro fell versus the Japanese currency, down 0.1% at 161.45 yen , while
the Swiss franc tumbled 0.7% to 169.97 yen .

Helen Given, FX trader at Monex USA in Washington, said overall the yen had
gained more than the other safe havens, particularly against the dollar, as
it continued to benefit from an expected U.S. interest rate cut next month,
which was confirmed by Federal Reserve Chair Jerome Powell last Friday in a
hawkish speech in Jackson Hole, Wyoming.

That prompted traders to seal bets of a 25 basis point (bps) rate cut in
September and even boost expectations of a super-sized 50 bps rate cut.

 

"Powell comes in and sounds really quite alarmist, in a way, particularly
his comments around employment reports," said Klarity's Sahota.

"His comments had nothing about slow, gradual rate cuts. He seemed to be
giving an open letter to say that if data suggests, we will go hard and we
will go fast."

 

The dollar recovered a bit against the yen after data showed U.S. durable
goods orders surged 9.9% in July, after falling in June. However,
non-defense capital goods orders excluding aircraft, a closely-watched proxy
for business spending plans, dipped 0.1% after a downwardly revised 0.5%
increase in June.

 

 

The euro eased 0.3% against the dollar to $1.1161 . Sources told Reuters
that ECB policymakers are lining up behind another rate cut on Sept. 12.

 

The risk-off sentiment also weighed on the Australian and New Zealand
dollars and the Norwegian crown , which were all lower against the dollar.

 

At the same time, the risk-off stance benefited the Swiss franc. The dollar
slipped 0.1% against the Swiss franc to 0.8469 francs . The euro also fell
0.3% against the Swiss currency to 0.9454 .

 

Sterling , meanwhile, slid 0.2% against the dollar to $1.3192 after jumping
as far as $1.3229 on Friday for the first time in 17 months. Bank of England
head Andrew Bailey said on Friday it was "too early to declare victory" over
inflation, signalling a less aggressive stance on interest rate cuts than
the Fed.

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold slips Gold nears record high on US rate-cut optimism, geopolitical
risks

(Reuters) - Gold prices firmed on Monday, nearing its recent record high,
amid solid bets of a September interest-rate cut following dovish signals
from Federal Reserve Chair Jerome Powell and safe-haven demand due to
geopolitical risks in the Middle East.

Spot gold rose 0.3% to $2,518.47 per ounce at 01:45 p.m. ET (1742 GMT), just
shy of the record high of $2,531.60 hit last week. U.S. gold futures settled
0.3% higher at $2,555.20.

 

 

The dovish signals from Powell's speech on Friday and safe-haven interest
and geopolitical risks in the Middle East are precipitating the bid in gold
this morning, said Peter A. Grant, Vice President and Senior Metals
Strategist at Zaner Metals.

 

Hezbollah had launched hundreds of rockets and drones at Israel early on
Sunday.

"I've got a short term kind of Fibonacci objective (for gold prices) at
$2,539.77 and then my secondary is at $2,597.15," Grant added.

 

 

Powell on Friday endorsed an imminent start to rate cuts, saying further
cooling in the job market would be unwelcome.

Traders have fully priced in a cut for next month, with a 69.5% chance of a
25-basis-point (bp) reduction and a 30.5% chance of a 50 bp cut, according
to the CME FedWatch tool, opens new tab.

 

Bullion, traditionally seen as a hedge against geopolitical risks, tends to
thrive in a low-interest-rate environment.

"There might be some indication that China is going to come back in, but
even if they don't, demand from central banks has been pretty robust
regardless of price this year and that's going to continue," Grant said.

 

Gold demand in top consumers India and China is expected to improve in the
next few months, industry officials said.

Spot silver rose 0.6% to $29.98, hitting a more than a month high.

"Industrial demand for silver looks relatively strong going into 2025,
particularly as demand from solar photovoltaics looks to retain a good pace
of growth," analysts at Heraeus wrote in a note.

 

Platinum gained 0.1% to $963.80, while palladium held steady at $963.00.

 

 

 


 

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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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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