Bulls n Bears Daily Market Commentary : 04 December 2024

Thu Dec 5 05:25:00 CAT 2024

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Bulls n Bears Daily Market Commentary : 04 December 2024

ZSE commentary 

ZSE Losses persist on the bourse...

Losses persisted on the ZSE as liquidity search characterised the session.
The mainstream All Share Index declined 1.44% to 250.64pts while, the ZSE
Top Ten Index shed 1.43% to 247.05pts. The Mid Cap Index slid 1.61% to end
at 268 .93pts while, ZSE Agriculture Index let go 0.42% to 232.52pts.
Proplastics was the top laggard of the day on a 15.00% plunge to close at
$2.1081. Trailing was Mashonaland Holdings which succumbed 4.45% to $2.5790
while, Econet tumbled 3.19% to end pegged at $3.1906. Top capitalised stock
Delta retreated 2.36% to $16.7065 as BAT went down 1.53% to $129.0000.
Partially mitigating today's losses was agriculture concern Ariston which
put on 0.28% to $0.0704. Dairibord rose 0.20% to $1.9544 as banking group
NMB added 0.04% to $3.7025 on scrappy 200 shares.

Activity aggregates were depressed in the session as reflected in volumes
which dipped 82.72% to 594,600 shares while, turnover dropped 26.09% to $5
.40m. Volume leaders of the day were Delta, Econet and OKZIM which
contributed a shared 94.25%. Value outturn was anchored by Delta (76.45%)
and BAT (10.02%). Foreigners were net sellers in the session as inflow
stood  at  $97,393.00  while,  outflows  amounted  to

$564,261.00. The Old Mutual ETF was the only active fund in the session as
it came off 3.51% to $0.2200 on 4,510 units. The Tigere REIT plummeted 1.74%
to $1.2000 while, the Revitus REIT was stable at $0.9325.

VFEX drops further in midweek session ...

The VFEX All Share Index dropped further in the midweek session as it shed
1.41% to 96.93pts. Simbisa was the worst performer  of the day after a 7.32%
retreat that  took  it to $0.2785 . Africa Sun slipped 3.54% to $0.0300
while, Axia trimmed 2.50% to $0.0780. SeedCo Limitec! eased 1.50% to $0.1975
while, Padenga was 1.33% weake r at $0.1855. Trading in the positive was
National Foods that gained 0.25% to close at $1.3694 having traded a mere
161 shares.

Volumes traded firmed 37.95% to 2.17m while, turnover ballooned 128.89% to
$174,710.34. Ax ia claimed 91.62% of the total volumes traded and 88.65% of
the value outturn.

 <mailto:info at bulls.co.zw> 

South Africa

The rand takes massive load shedding hit

South Africa's rand has endured a tumultuous two years, with load-shedding
emerging as a critical factor behind its staggering underperformance.

According to insights from investment manager Ninety One, a significant 75%
of the currency's struggles during this period can be attributed to the
nation's relentless power outages.

This underperformance was most evident in May 2023, coinciding with the peak
of South Africa's electricity crisis.

However, recent improvements in energy availability have enabled the rand to
claw back some losses, with the currency appearing more stable as reforms
take effect.

The dramatic depreciation of the rand was fueled by unprecedented levels of
load-shedding, which widened the gap between the currency's expected return
and its actual performance.

The situation escalated as the country recorded its worst-ever load-shedding
levels last year.

This electricity crisis had wide-ranging implications for investor
confidence and economic stability.

Nonetheless, a series of decisive actions, including the establishment of
the National Energy Crisis Committee (NECOM), laid the groundwork for a
gradual recovery.

At the height of the crisis, NECOM served as a "war room," enabling
collaboration between the government, businesses, and consumers to address
the power shortages.

Significant progress has since been made, with the energy availability
factor surpassing 70% and a cessation of load-shedding since late March
2024.

This improvement reflects substantial investments by businesses and
households in renewable energy solutions, which have alleviated pressure on
Eskom's ageing fleet while enabling essential maintenance at its power
plants.

The acceleration of renewable energy adoption has been a game-changer for
South Africa's energy landscape.

According to Ninety One, over the past two years, the share of renewable
energy in the country's installed capacity has doubled, rising from 10% to
20%.

This shift has been bolstered by an increase in private-public partnerships,
with NERSA-registered projects nearing a combined capacity comparable to
Eskom's Medupi and Kusile power stations.

Rooftop solar installations have also surged, tripling to a total capacity
of 6 GW.

These developments mark a significant step toward diversifying South
Africa's energy mix and reducing reliance on Eskom's coal-dependent
infrastructure.

Despite these advancements, experts, including energy analyst Chris Yelland,
urge caution.

Eskom continues to grapple with longstanding challenges, such as an ageing
coal-fired fleet, vulnerabilities in transmission infrastructure, and
systemic issues like vandalism, theft, and illegal connections.

While reliance on Open-Cycle Gas Turbines (OCGTs) has helped bridge power
deficits during peak demand periods, this approach is both costly and
unsustainable.

Between April and November 2024, Eskom spent R6.61 billion on OCGTs-a marked
reduction from the R22.94 billion spent in the previous year, yet still a
concern given their limited contribution to the overall grid.

Eskom's recent operational improvements align with its Summer Outlook, which
predicts a load-shedding-free period from September 2024 to March 2025.

This optimism stems from a reduction in unplanned capacity loss factors,
which have dropped from 33.6% in 2023 to 25% year-to-date.

Additionally, planned maintenance activities have ramped up, with over 8,400
MW currently undergoing repairs as part of the utility's summer strategy.

These structural changes, coupled with a stable electricity supply, have
bolstered investor sentiment and provided a lifeline to the struggling rand.

However, localised issues such as illegal connections, vandalism, and meter
tampering continue to strain Eskom's network, often necessitating load
reduction measures to protect infrastructure.

These persistent challenges underscore the arduous journey ahead for South
Africa's power utility.

With the national election now behind and load-shedding absent since March,
Ninety One asserts that the rand appears fairly valued.

The firm points to improving terms of trade, softer oil prices, and stronger
commodity markets as factors supporting a more stable currency outlook.

While the road to sustained energy stability is fraught with obstacles,
South Africa's recent progress offers hope for a brighter economic future,
with the rand poised to regain its footing as reforms take root.

Nigeria

Naira devaluation raises foreign debt by N30tn - Report

Naira devaluation raised Nigeria's external debt by about N30.03tn between
2023 and June 2024 when considered in naira terms, an analysis by The PUNCH
showed.

Despite a reduction in the country's debt when measured in US dollars, the
exchange rate shift has made Nigeria's foreign obligations far more costly
in local currency.

Data from the Debt Management Office shows that as of June 1, 2023,
Nigeria's external debt stood at $43.16bn.

At an exchange rate of N770.38 to the dollar, this amounted to N33.25tn.
However, by June 1, 2024, the naira had depreciated by 47.6 per cent, with
the exchange rate rising to N1,470.19 to the dollar.

Baby with Spina Bifida Begins Treatment After Punch Report; Mother Thanks
Supporters0:00 / 0:00

PUNCH SPORTS EXTRA: Liverpool Go Nine Point Top, Chelsea Maintain Form In
EPL0:00 / 0:00

As a result, Nigeria's external debt, which has dropped to $42.90bn, is now
equivalent to N63.07tn.

In dollar terms, Nigeria's external debt dropped by 0.60 per cent or
$258.18m between June 2023 and the same month of 2024.

However, in naira terms, there was an increase of 89.7 per cent or N29.82tn
within the same period.

The PUNCH further observed that if the June 2023 exchange rate (N770.38/$1)
had been used, Nigeria's external debt would have been N33.05tn.

This further shows that the naira devaluation added N30.02tn to Nigeria's
external debt in one year as the country battles currency weakness and
rising total debt.

While the nominal value of Nigeria's external debt in dollar terms has
remained relatively stable, the depreciation of the local currency has
caused a steep rise in the naira equivalent.

The PUNCH further observed that external debt accounted for 46.96 per cent
of Nigeria's total debt by June 2024, up from 38.05 per cent recorded in the
same month last year.

Further analysis by The PUNCH showed that Multilateral lenders remain
Nigeria's largest external creditors, accounting for over half of the
country's external debt (50.41 per cent or $21.62bn) as of June 2024.

These creditors include the International Monetary Fund, the World Bank
Group, the African Development Bank Group, and the Islamic Development Bank,
among others.

Nigeria owes $1.61bn to the IMF, making up 3.75 per cent of the total
external debt.

The World Bank's share of Nigeria's debt totals $16.32bn, with the majority
owed to the International Development Association, which accounts for
$16.32bn, which represents 38 per cent of Nigeria's total external debt.

The International Bank for Reconstruction and Development, another arm of
the World Bank, is owed $484.0m, or 1.13 per cent.

Nigeria's debt to the AfDB group is $3.87bn, representing 9.03 per cent of
the total external debt.

This includes $1.63bn to the African Development Bank and $991.89m to the
African Development Fund.

Nigeria owes $4.97m to Arab Bank for Economic Development in Africa a
negligible amount relative to the total, at 0.01 per cent.

Debt to the European Development Fund totals $30.72m, or 0.07 per cent of
Nigeria's external debt.

Nigeria's debt to the IsDB stands at $241.84m, or 0.56 per cent of the total
debt, while Nigeria's debt to the International Fund for Agricultural
Development is $273.51m, which is 0.64 per cent of the external debt stock.

 <mailto:info at bulls.co.zw> 

Global Markets

Euro edges higher, but off peaks after French no-confidence vote; US dollar
flat

(Reuters) - The euro rose marginally against the U.S. dollar on Wednesday,
but came off session highs, after a widely expected collapse of the French
government following a no-confidence vote by opposition lawmakers.

The greenback, on the other hand, was little changed overall, as the
December interest rate cut chances remained on track amid signs that the
American economy was slowing.

The South Korean won , one of the biggest movers on Tuesday, rose against
the dollar, bolstered by suspected central bank intervention and the finance
ministry's pledge of "unlimited" liquidity support to markets. That came a
day after South Korean President Yoon Suk Yeol declared martial law in a
late-night television address, only to lift it hours later.

The euro was slightly up against the dollar at $1.0512 after far-right and
left-wing lawmakers joined forces to back a no-confidence motion against
Prime Minister Michel Barnier and his government, with a majority 331 votes.
Barnier is expected to tender his resignation and that of his government to
President Emmanuel Macron shortly.

"At this point, it really becomes a question of how much worse the situation
gets from here," said Eugene Epstein, head of trading and structured
products, North America, at Moneycorp in New Jersey.

"We don't have any kind of clarity on what the outcome of the votes is going
to be and how long essentially the budget is used as leverage to get all the
parties' political interest sorted."

Three sources told Reuters that French President Emmanuel Macron aims to
install a new prime minister quickly if his government falls on Wednesday.

Barnier's removal would deepen the political crisis in the euro zone's
second-largest economy, and could further weigh on the euro.

Investors also digested comments from European Central Bank President
Christine Lagarde in a parliamentary hearing on Wednesday. She said the ECB
will continue to lower rates, but did not commit to any pace of easing.

The ECB will next meet on Dec. 12, and economists overwhelmingly expect
another 25 basis-point (bp) rate cut, the fourth such move this year.

FED SEEN STILL CUTTING RATES IN DECEMBER

In the United States, the dollar index was flat at 106.33. Wednesday's data
did not shake expectations of an interest rate cut later this month.

U.S. private payrolls increased at a moderate pace in November, but it came
below expectations, while annual wages for workers staying in their jobs
edged up for the first time in 25 months.

Private payrolls rose by 146,000 jobs last month after advancing by a
downwardly revised 184,000 in October, the ADP report showed. Economists
polled by Reuters had forecast private employment increasing by 150,000
after a previously reported 233,000 jump in October.

At the same time, the U.S. services sector activity slowed in November after
posting big gains in recent months. The Institute for Supply Management's
non-manufacturing purchasing managers index slipped to 52.1 last month after
surging to 56.0 in October, the highest since August 2022. Economists polled
by Reuters had forecast the services PMI easing to 55.5.

U.S. fed funds futures raised the chances of a 25-bp cut this month to 78%,
from 73% late Tuesday, while reducing the odds of a pause in easing to 22%
from 27% the day before, according to the CME's FedWatch.

"It's possible the Fed cuts again in December, which can put tactical
pressure on the dollar because the market is long dollars already," said
Vassili Serebriakov, FX strategist at UBS in New York. "But unless U.S. data
really deteriorates, which we don't see at the moment, any weakness in the
dollar is going to be short-lived."

The dollar edged higher after St. Louis Federal Reserve President Alberto
Musalem said on Wednesday he expects the Fed to continue cutting rates, but
said it is keeping options open on the Dec. 17-18 meeting. Musalem will be a
voter on the Federal Open Market Committee next year.

Fed Chair Jerome Powell later on Wednesday seemed to signal his support for
a slower pace of interest-rate cuts ahead, noting the economy is stronger
now than the central bank had expected in September when it began easing.

In South Korea, the won rallied on Wednesday after plunging overnight in the
wake of President's declaration of martial law, which was reversed hours
later.

The dollar was last down 0.8% at 1,413.6 won, after jumping overnight. But
politics remained in focus and South Korean lawmakers on Wednesday submitted
a bill to impeach President Yoon.

Dealers said the Bank of Korea may have supported the won at Wednesday's
open by selling dollars.

The dollar also climbed against the yen , rising 0.6% to 150.52, after media
reports raised doubts about market expectations the Bank of Japan would hike
interest rates this month sent government bond yields lower .

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices tick higher on benign US employment data

(Reuters) - Gold edged higher on Wednesday after data showed U.S. private
payrolls rose at a moderate pace last month, while investors digested
remarks from Federal Reserve Chair Jerome Powell and looked forward to
Friday's non-farm payrolls report.

Spot gold was up 0.4% at $2,654.03 an ounce by 02:15 p.m. ET (1915 GMT).
U.S. gold futures settled 0.3% higher at $2,676.20.

"Gold bounces as ADP disappoints, coming in just short of consensus. Market
was looking for a bigger bounce a month after the hurricanes and the Boeing
strike," said Tai Wong, an independent metals trader.

Private payrolls rose by 146,000 last month, the ADP report showed.
Economists polled by Reuters had forecast private employment increasing by
150,000 positions.

Powell said the recent performance of the economy will allow the U.S.
central bank to be more judicious with the future path of interest rate
cuts.

Investors now await Friday's pivotal U.S. payroll report and next week's
inflation data for clues on the Fed's policy trajectory.

Gold is seeing a muted reaction today, with a stronger impact expected from
the upcoming U.S. nonfarm payrolls and if data points to weakening
employment it would support prices, said Everett Millman, chief market
analyst with Gainesville Coins.

U.S. central bankers on Tuesday signalled inflation is gradually heading
toward the 2% target, hinting at potential interest rate cuts.

Traders are pricing in a 77% chance of a 25-basis-point cut at the Fed's
Dec. 17-18 meeting. Bullion, which does not pay any interest, historically
performs well in low-interest rate environments.

Safe-haven gold was also supported by global geopolitical unrest, including
South Korea's political turmoil, France's government facing collapse,
relentless Russian drone strikes in Ukraine and Israel threatening war with
Lebanon if its truce with Hezbollah collapses.

Spot silver rose 1% to $31.33 an ounce, platinum lost 1.3% to $940.6 and
palladium was up 0.5% at $976.56.

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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opinions expressed and recommendations made are subject to change without
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 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27
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