Bulls n Bears Daily Market Commentary : 31 January 2024

Thu Feb 1 08:28:10 CAT 2024

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Bulls n Bears Daily Market Commentary : 31 January 2024

 <https://www.dulys.co.zw/> 
ZSE commentary

Delta anchors ZSE in month-end session...

Trades in Delta helped anchor activity aggregates in the month 1 end session
as a circa 1.7m shares worth $19.86bn exchanged hands in the beverages
group. Resultantly, the value outturn jumped by 753.04% to close at $25.83bn
with Delta claiming 77.23% of the totals. Other notable trades were seen in
Meikles which contributed 13.61% and Unifreight which turnover ZWL $ 1
753.04 accounted for 5.37%. Firming demand continued on the bourse as
reflected in three of the major indices under our  review closed with double
digits figure. 

The primary All Share-Index rose 10.57% to close at 542,743.66pts while, the
Top Ten Index rose further by 12.26% to settle at 246,209.92pts. The
Agriculture Index rose 10.61% to end the month end session at 1,524.30pts.

Overall, twenty-four counters traded in the positive against a mere one
loser as three remained unchanged to leave the market with a wide positive
breadth of twenty-three. Leading the gainers list was the agricultural
concern Ariston that ticked up 30.96% to close at $62.7800. completing the
Top five set was the quartet of Hippo, BAT, ZB and NMB which went up by a
similar 15% to see them closing at $5,060.0000, $46,815.6500, $1,809.8000
and $1,484.4000. Other notable gains were seen Delta (14.94%), Ecocash
(14.33%), SeedCo (14.67%) Tanganda (14.84%) and OKZIM (14.99%). on the
downward was Masimba which lost a negligible 0.0065% to close at
$2,974.8053. A total of 4.38m units worth $87.81m exchanged hands in the ETF
section. The Cass Saddle ETF went up 7.28% to $7.5500 while, the Old Mutual
ETF rose 12.25% to settle at $89.6841. 

The Morgan and Co Multi- Sector and Made In Zimbabwe ETF added 0.10% and
0.27% to settle at only loser amongst the ETFs after dropping 0.03% to
settle at $15.5300.

Global Currencies & Equity Markets

South Africa

South African rand firms against dollar ahead of Fed rate decision

(Reuters) -South Africa's rand strengthened against a weaker U.S. dollar on
Wednesday, ahead of an interest rate decision by the Federal Reserve.

At 1530 GMT, the rand traded at 18.6250 against the dollar ZAR=D3, about
0.9% stronger than its previous close.

The dollar index =USD was last down around 0.3% against a basket of
currencies.

The U.S. central bank is expected to hold rates steady while investors look
for clues on when they can expect a rate cut.

On the stock market, the Top-40 .JTOPI index fell about 0.1%.

South Africa's benchmark 2030 government bond ZAR2030= was stronger in late
deals, with the yield down 3 basis points to 9.750%.

Nigeria

Nigeria devalues the naira in bid to attract foreign investors

Nigeria has sharply devalued its currency for the second time in eight
months, as the west African country bids to clear up its messy system of
exchange rates and attract investment to its flailing economy.

The naira has tumbled this week after the methodology used to calculate the
official exchange rate was changed, taking the currency closer to the black
market rate.

The move is widely seen as part of market-friendly reforms being introduced
by Bola Tinubu, who became president last May and who shortly afterwards
jettisoned the years-long peg instituted by the former central bank chief
that had kept the currency artificially high.

However, the country still kept an official rate that was well above the
freely-traded rate, which made it more expensive for multinational companies
wanting to invest in Nigeria.

Charlie Robertson, head of macro strategy at asset management firm FIM
Partners, said the new methodology could help Nigeria attract more
investment as it essentially abolishes the multiple exchange rates that
frustrated investors.

"It could take months but there could be more dollars swirling around in
Nigeria now that the currency is officially very cheap," Robertson said.

FMDQ Group, which calculates the country's official exchange rate, announced
on Friday that it was revising its methodology to "address recent
fluctuations and challenges encountered" in Nigeria's highly volatile
foreign exchange market, where the official exchange rate often trailed
parallel market values. The publication of exchange rates was suspended that
day.

The revised exchange rate system, which FMDQ began publishing this week,
will ensure that "rates accurately reflect market conditions while upholding
price formation and transparency", the firm said.

The currency fell by nearly 40 per cent to 1482.57 to the dollar on the
official market on Tuesday and slipped as low as 1,531 on Wednesday,
according to FMDQ. That took the naira past N1,475 to the dollar it is
trading at on the black market, according to one trader.

Nigeria's central bank on Monday took aim at authorised dealers and their
customers, which it said were reporting "inaccurate and misleading
information" on their transaction rates, leading to distortions in the
official market.

"This behaviour is not compliant with the ethical standards associated with
a sound financial market, and deliberate attempts to create price
distortions by reporting false transaction details amounts to market
manipulation which will not be tolerated and will henceforth face
sanctions," the bank said.

The naira has plumbed new depths since the peg was removed as a lack of
foreign exchange liquidity stalled planned reforms.

The central bank owes about $5bn in mature forward contracts to different
groups in the Nigerian economy that sold naira to the bank in exchange for
dollars. FIM's Robertson warned that this backlog would have to be resolved
and short term interest rates needed to rise significantly to attract
portfolio investors.

It is a slight improvement on the $7bn the bank owed at the start of the
tenure of its new governor Olayemi Cardoso, a former Citigroup executive.
The bank has pledged to settle the backlog "within a short time" and said it
hopes to fix the "fundamental issues that have hindered the effective
operation of the Nigerian foreign-exchange markets".

But sources of dollar inflows into Nigeria remain hard to find. Investment
into the country has fallen drastically and crude oil production, from which
it earns roughly 90 per cent of its export income, is short of its 1.8mn
barrels per day Opec quota. Central bank data shows it has $32.87bn in
foreign exchange reserves, although almost $20bn of this was committed to
paying off a series of derivatives deals.

Investors remain wary of bringing hard currency into the country as dollar
shortages have made it difficult for businesses to repatriate revenues to
their home countries.

Foreign airlines operating in Nigeria last month threatened to strike over
their inability to get money out of the country. Dubai-based carrier
Emirates suspended its flights to and from Nigeria in 2022 and has yet to
return. Nigeria said this week it released $64.4mn of trapped airline funds
but the International Air Transport Association said there was still $700mn
left to be paid out.

Finance minister Wale Edun said in Davos last month that Nigeria is seeking
about $1.5bn from the World Bank to ease liquidity concerns. Last year he
said the country had a "line of sight" on $10bn in inflows in the country
but that has yet to materialise. A scheme that saw the state oil company
pledge oil in exchange for dollars from the African Export-Import Bank
(Afrexim) netted Nigeria $3bn last month.

A senior western diplomat whose country has companies operating in Nigeria
told the Financial Times that businesses remain unconvinced by the
government's announcements of potential dollar inflows to ease the pervasive
hard currency shortages.

On a visit to Nigeria last week, US secretary of state Antony Blinken
mentioned that the inability to repatriate capital was an "impediment" to
American investors maximising opportunities in Nigeria.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar rebounds as Fed's Powell sees March rate cut as unlikely

(Reuters) - The dollar gained on the euro and pared losses against the yen
on Wednesday after Federal Reserve Chair Jerome Powell said that a rate cut
in March was not the U.S. central bank's "base case."

It came after the Fed offered a neutral and less dovish outlook on rates
than many investors had expected.

The Fed gave an "extremely neutral, non-committal statement", said Karl
Schamotta, chief market strategist at Corpay in Toronto.

The U.S. central bank left interest rates unchanged and dropped a
longstanding reference to possible further hikes in borrowing costs. But it
gave no hint that a rate cut was imminent.

"Traders thought that with the shift in the bias towards neutral that the
Fed would accompany this pivot with dovish language. But the Fed did not. If
anything, the Fed added some hawkish language in the text," said Thierry
Albert Wizman, global FX and rates strategist at Macquarie in New York.

Fed Chair Jerome Powell said in a press conference that the Fed would need
to see more favorable data to be sure it was time to lower rates. "We do
have confidence but we want to get greater confidence" that cooling
inflation data was sending "a true signal", he said.

The dollar index was last up 0.26% on the day at 103.66. It is on track for
a 2.3% gain this month, the best month since September.

Traders are now pricing in a 38% probability that the Fed will cut rates in
March, down from 59% earlier on Wednesday. It has fallen from 89% a month
ago.

Investors are also focused on Friday's U.S. jobs report for January, which
is expected to show that employers added 180,000 jobs during the month.
(USNFAR=ECI), opens new tab

The ADP National Employment Report showed on Wednesday that private payrolls
increased by 107,000 jobs last month, fewer than economists' expectations of
145,000 jobs.

The dollar has rebounded this year as U.S. economic data shows a still
resilient economy and one that has a better outlook than comparable regions
including the euro zone.

The euro fell 0.4% to $1.08005 and got as low as $1.07950, the lowest since
Dec. 13. It is on pace for a 2.2% loss this month, the worst month since
September.

Data earlier on Wednesday showed that German inflation eased slightly more
than expected in January to 3.1%, helped by a drop in energy prices.

The dollar fell 0.25% to 147.26 yen . The Japanese currency has weakened due
to the wide gap between U.S. and Japanese interest rates.

The greenback is on track for a 4.5% monthly gain against the yen, the
largest since February last year, as weak wage data and cooling inflation
leave room for the Bank of Japan to take its time raising rates.

Bank of Japan policymakers discussed in January the likelihood of a
near-term exit from negative interest rates and scenarios for phasing out
the bank's massive stimulus program, a summary of opinions at the meeting
showed on Wednesday.

The summary highlights a growing view within the board that conditions were
falling in place to soon pull short-term interest rates out of negative
territory, which would be Japan's first interest rate hike since 2007.

Sterling fell 0.28% to $1.26630 before the Bank of England's policy
announcement on Thursday, where rates are also set to be unchanged.

In cryptocurrencies, bitcoin fell 1.57% to $42,864.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold drifts lower after Powell pushes back prospect of March rate cut

(Reuters) - Gold prices reversed course and edged lower on Wednesday after
the Federal Reserve Chair Jerome Powell pushed back strongly against
expectations of a U.S. rate cut by March.

Spot gold eased 0.1% at $2,034.37 per ounce by 03:10 p.m. ET (2010 GMT)
after rising as much as 1% earlier in the session. Bullion was down 1.3%
this month but have held above the $2,000 per ounce psychological level so
far this year.

The U.S. central bank left interest rates unchanged but Powell knocked down
the idea the Fed could cut rates in the spring, which many market
participants have been expecting.

Powell sounded some dovish notes but the key comment is "not March", which
should keep the rate-cut hounds at bay for now, said Tai Wong, a New
York-based independent metals analyst.

Gold has really been fairly bulletproof, but incoming data will be heavily
parsed, Wong added.

Bullion is considered a hedge against inflation and economic uncertainties
but higher rates increase the opportunity cost of holding the non-yielding
asset.

Traders trimmed bets on March start to U.S. rate cuts, and now see a May
start as about as likely.

The dollar index (.DXY), opens new tab pared losses while benchmark 10-year
U.S. Treasury yields fell to near 3-week lows after Fed verdict.

Strong physical and central bank demand for gold will continue, said Daniel
Ghali, commodity strategist at TD Securities.

Data showed U.S. private payrolls rose far less than expected in January.
Investors also took stock of news the New York Community Bancorp (NYCB.N),
opens new tab cut its dividend and posted a surprise loss, renewing fears
over the health of similar lenders.

Spot silver prices fell 1.2% to $22.88 per ounce, platinum eased 0.4% at
$917.20, while palladium gained 0.3% at $979.31. All three metals were
poised for monthly declines.

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
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
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opinions expressed and recommendations made are subject to change without
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