Bulls n Bears Daily Market Commentary : 22 February 2024

Thu Feb 22 23:44:05 CAT 2024

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Bulls n Bears Daily Market Commentary : 22 February 2024

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

Econet, Delta lift ZSE in thin trades but focus now on country's politics

HARARE  - The stock market was back in positive territory in post-holiday
trades on Thursday led by gains in Econet and Delta. Trading was, however,
thin as momentum continues to lack as investors await the release of the
Monetary Policy Statement before the end of this month, although general
focus is on the country's politics in the ruling Zanu PF and opposition
parties.

Yesterday, the youth, a grouping which has historically been used to set
political agendas called for President Mnangagwa to continue his rule beyond
the constitutionally mandated 10-year term at the National Youth Day
celebrations. This sets the stage for factional and constitutional battles,
which again historically, have come at the expense of economic development
and growth.

At close, the All Share Index added 1.04% to 502 145.36 in a subdued
session. A total of 181 trades were recorded after 1.38 million shares
traded. Delta led in activity at 28 trades while Star Africa brought in the
most volume at 861 800 shares. Turnover was at $$771.09 million shares with
Delta contributing the bulk at $618.65 million.

The Top Ten Index rose 1.50% to 221 112.18. Econet Wireless was the standout
performer with a 10.51% gain to 170 021.47c and Delta added 1.33% to 711
905.37c on market cap of US$768.7 million.

EcoCash dropped 1.3% to 55590.63c but with a year to date gain of 215.53%.

The Medium Cap was near flat with a loss of 0.02% at 2 139 614.40.
Struggling agro firm Tanganda declined 5.28% to 186979.29c and Willdale was
4.53% lower to 5200.65c.  OK Zimbabwe, which recently released a downbeat Q3
trading update, dropped 3.39% to 60425.45c and Star Africa pared 3.06% to
772.78c.

There were gains in Unifreight, which added 6.25% to 42 500c and Meikles
2.94% ahead to 275588.24c.

Turnall, which is currently restructuring its operations, put on 2.19% to
6887.50c.

General Beltings lost 6.75% to 12780c - the day's worst performer. 

Turnover on the VFEX was moderate at US$144 552.40 after 1.37 million shares
traded.  First Capital led on volume at 1.01 million shares but it was
Innscor which contributed the most to turnover at US$96 774.90.

The VFEX All Share was 0.72% higher to 97.09. Simbisa led the risers with a
4.39% gain to 35.37 US cents and Innscor put on 1.87% to 42.99 US cents.
Other marginal gains were seen in First Capital and Padenga.

National Foods was the worst performer, down 4.76% to 140 US cents while
Axia and Seed Co International shed 0.33% and 0.17% respectively.-finx

Global Currencies & Equity Markets

South South Africa

South African rand falls sharply, tracking dollar

(Reuters) - South Africa's rand weakened sharply on Thursday, reversing all
of its gains and more from the previous day's budget speech as the currency
followed the direction of the U.S. dollar.

At 1513 GMT, the rand traded at 19.1425 against the dollar ZAR=D3, about
1.1% weaker than its previous close.

The dollar index =USD was trading up about 0.08% at 104.06, having rallied
from a weak position earlier in the day.

The rand initially jumped on Wednesday after the annual budget speech, in
which the finance minister said the government would tap 150 billion rand
($7.99 billion) from a central bank-administered contingency account in
order to limit borrowing. But most of the gains had been reversed by the end
of the day.

Its fall on Thursday was likely due to global rather than local factors,
said Danny Greeff, an analyst at ETM Analytics.

"The extent of the rand's retreat is somewhat puzzling, but speaks to its
lack of resilience to external shifts in market sentiment," he said.

On the stock market, the Top-40 .JTOPI index closed around 1.6% higher.
South Africa's benchmark 2030 government bond ZAR2030= was stronger, with
the yield down 2 basis points to 10.005%.

Zambia

Zambia's Kwacha emerges as Africa's best performing currency in 2024

Zambia's kwacha has emerged as the top-performing African currency against
the U.S. dollar this year, boosted by the central bank's aggressive monetary
policy tightening.

The kwacha has surged by 13.8% to 22.8 against the dollar in 2024, as
reported by LSEG data. The central bank took measures such as raising
commercial banks' reserve ratios and increasing interest rates to counter
the currency's decline, which had contributed to rising inflation, Reuters
reported.

Last November, the apex bank raised the statutory reserve ratio for deposits
in both local and foreign currencies by 3 percentage points to 14.5%.

Analysts, however, stress that the kwacha's sustained strengthening depends
on the country's ability to attract more foreign investment.

"The kwacha's performance this year has been remarkable," said Danny Greef,
Co-Head of Africa at research firm ETM Analytics.

Zambian officials attribute the prolonged debt restructuring, now in its
fourth year, to hindering foreign investment and contributing to the
kwacha's weakening.

Despite government initiatives to boost the sector, copper production, a
crucial source of foreign exchange for the southern African state, has also
declined.

"The measures that we have taken... are meant to stem some of the demand,
which we thought was excessive as we anticipate supply, which mainly comes
from the mining sector," Bank of Zambia governor Denny Kalyalya told a
public forum on Tuesday.

The kwacha has weakened slightly this week from 22.5 to $1 but is still more
than 20% stronger than the record low of 27.23 reached on February 6.

"What is expected is an adjustment that will stabilise around the 21-22 per
dollar," economist Munyumba Mutwale said, adding that increased foreign
currency flows were required for the kwacha to make further gains.

The government is now concluding arrangements for new investors to take over
Mopani and Konkola Copper Mines, while other companies including KoBold
Metals are undertaking exploration with commitments to fund new projects.

 <mailto:info at bulls.co.zw> 

Global Markets

Japanese Yen bears turn cautious amid intervention fears, not out of the
woods yet

The Japanese Yen (JPY) recovers a bit after hitting a fresh weekly low
against its American counterpart earlier this Thursday and remains on the
front foot heading into the European session. Verbal intervention by
Japanese authorities, along with comments by the Bank of Japan (BoJ)
Governor Kazuo Ueda, turns out to be key factors lending some support to the
JPY. That said, a recession in Japan might have already dashed hopes for an
imminent shift in the BoJ's policy stance in the coming months. This, along
with a generally positive tone around the equity markets, should keep a lid
on any meaningful appreciating move for the safe-haven JPY. 

The US Dollar (USD), on the other hand, continues with its struggle to
attract any meaningful buying and further contributes to the USD/JPY pair's
intraday pullback of around 25 pips from the vicinity of mid-150.00s.
Meanwhile, firming expectations that the Federal Reserve (Fed) will keep
interest rates higher for longer, bolstered by hawkish FOMC meeting minutes
released on Wednesday, remains supportive of elevated US Treasury bond
yields. This favours the USD bulls and suggests that the path of least
resistance for the currency pair is to the upside. 

Daily Digest Market Movers: Japanese Yen attracts buyers amid intervention
fears, lacks follow-through

Japan's Finance Minister Shunichi Suzuki reiterated on Thursday that the
government is closely watching FX moves with a high sense of urgency and
lends some support to the Japanese Yen. 

Bank of Japan (BoJ) Governor Kazuo Ueda said that service prices continue to
rise moderately. Expect a positive cycle to strengthen in which a tight
labor market leads to higher wages and household income.

A recession in Japan fuelled uncertainty about the likely timing of when the
BoJ will exit the negative interest rates policy and  keeps a lid on any
meaningful upside for the domestic currency. 

A private business survey released this Thursday showed that factory
activity in Japan shrank for the ninth consecutive month in February due to
a sharp reduction in new orders.

The au Jibun Bank flash Japan Manufacturing PMI declined to 47.2 in February
from 48.0 previous and the gauge for the services sector fell from 53.1 to
52.5 for the current month.

The Composite PMI, which combines both manufacturing and services sectors,
came in at 50.3 in February, down from the 51.5  previous and suggesting
that the overall business activity stagnated.

The report added that the slight improvement seen in January evaporated in
February and that firms were the least upbeat since January 2023, reflecting
reduced optimism with regard to future output.

The Japanese Cabinet Office said in its report on Wednesday that the
government downgraded its view on the economy in February, marking the first
downgrade since November 2023.

The US Dollar struggles to attract any meaningful buyers despite the fact
that the January FOMC meeting minutes revealed that officials were concerned
about the risks of cutting rates too soon.

Policymakers agreed that they needed greater confidence in falling inflation
before considering cutting rates, reinforcing bets that the Federal Reserve
would keep rates higher for longer.

Traders now expect that the Fed will begin cutting rates in June, which,
along with a weaker 20-year bond auction, pushed the US Treasury bond yields
higher across the board on Wednesday.

The yield on the benchmark 10-year US government bond advanced to its
highest level since November 30, which favours the USD bulls and lends
additional support to the currency pair.

>From a technical perspective, the range-bound price action witnessed over
the past week or so constitutes the formation of a rectangle on short-term
charts. Against the backdrop of the recent breakout through the
148.70-148.80 horizontal barrier, this might still be categorized as a
bullish consolidation phase. Moreover, oscillators on the daily chart are
holding in the positive territory and are still away from the overbought
zone, validating the constructive outlook for the USD/JPY pair. It, however,
will still be prudent to wait for some follow-through buying beyond the
150.85-150.90 region, or a multi-month top set last week, before positioning
for any further gains. Spot prices might then climb to the 151.45
intermediate hurdle en route to the 152.00 neighbourhood, or a multi-decade
peak set in October 2022 and retested in November 2023.

On the flip side, the 150.00 psychological mark now seems to protect the
immediate downside ahead of the weekly trough, around the 149.70-149.65
region. Any further weakness could attract some buyers near the
149.25-149.20 area. This is followed by the 149.00 round figure and the
148.80-148.70 resistance-turned-support, which if broken decisively will
suggest that the USD/JPY pair has formed a near-term top and set the stage
for some meaningful corrective decline. The subsequent downfall has the
potential to drag spot prices to the 148.35-148.30 region en route to the
148.00 mark and the 100-day Simple Moving Average (SMA) support near the
147.70 zone.

Japanese Yen price this week

The table below shows the percentage change of Japanese Yen (JPY) against
listed major currencies this week. Japanese Yen was the strongest against
the Canadian Dollar.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold slips after US data signals resilient economy

(Reuters) - Gold prices fell from a near two-week high on Thursday after
jobless claims data indicated a strong economy, while investors awaited
further economic data for guidance on the U.S. Federal Reserve's interest
rate stance.

Spot gold lost 0.1% to $2,022.74 an ounce by 01:42 p.m. ET (1842 GMT), after
hitting its highest since Feb. 9 of $2034.69 earlier in the session.

U.S. gold futures settled 0.2% lower to $2030.7.

U.S. Treasury yields gained, making bullion more expensive for other
currency holders.

"We see gold stay at these levels and there is more downside risks to gold
in the short term than upside" if we get more positive data on the U.S.
economy and if inflation doesn't continue to ease, said Chris Gaffney,
president of world markets at EverBank.

Data showed the number of Americans filing new claims for unemployment
benefits unexpectedly fell last week, suggesting that job growth likely
remained solid in February.

Minutes of the Fed's latest policy meeting released on Wednesday showed that
a majority of the central bank's policymakers are concerned about the risks
of cutting interest rates too soon.

Lower interest rates boost the appeal of holding non-yielding gold, with
markets pricing in about a 66% chance of a June rate cut, as per the CME Fed
Watch Tool, opens new tab.

Geopolitical risks seem to support the safe-haven aspect of gold and
technical charts show that gold has established a "pretty hard floor" at
around $2000 level, Gaffney added.

The conflict in the Middle East has intensified with Israel's bombardment of
Rafah in Gaza's south.

Investors are currently dramatically under positioned for a Fed cutting
cycle and "we still expect gold prices to rally quite notably into the
second quarter of this year", said Daniel Ghali, commodity strategist at TD
Securities.

In other precious metals, spot platinum was up 1.9% at $899.60 an ounce,
palladium rose 2% to $968.40 and silver lost 0.3% to $22.80.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

Robert Gabriel Mugabe Youth Day

Feb 21

Nampak

AGM

Virtual (FTS Platform)

28 Feb 9am

Art

AGM

virtual (escrow platform)

March 7. 2:30

2024 auction tobacco marketing season opens

13 march

Good Friday

march 29

Easter Monday

1 April

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 

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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
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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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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