Bulls n Bears Daily Market Commentary : 02 January 2024

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Bulls n Bears Daily Market Commentary : 02 January 2024

 

 	

 

 

 	


ZSE commentary

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

ZSE in positive start to the New Year

HARARE - Zimbabwe Stock Exchange shares maintained a positive note at the
start of the year in line although without great expectation for strong
volume momentum.

Stocks are expected to trade higher in the first month as they reprice to
the current inflationary pressures on the ZWL driven by further depreciation
of the local currency on the parallel market. The ZWL is now being quoted
within the range of 11 500-12 000 on the parallel market against the auction
rate of 5 903.39. The FIU has, however, agreed on a rate to be used by
formal retailers, which has seen some of the major stores offering
competitive US dollar discounts.

Investors are now focused on the Reserve Bank of Zimbabwe's monetary policy
statement - usually held by the second week of February - for a revised and
sound monetary targeting framework. This will be governor John Mangudya's
last MPS before John Mushayavanhu takes over in May.

At close, the All Share Index resumed its record march gaining 1.40% to 213
789.52.  Market capitalisation was at $17.04 trillion or under US$2 billion
using the parallel market exchange rate.

Trading volume was subdued at 1.78 million shares after 217 trades. Turnover
was at $624.95 million with Delta leading at $246.21 million. Star Africa
led in volume at 1.05 million shares. Foreign participation was
insignificant.

 

 

 

TSL and First Mutual Holdings are now accounted for in the Top Ten Index on
market caps of $393.88 billion and $722.48 billion respectively. The two
replace Seed Co and Tanganda whose market caps fell significantly in Q4.

Truworths, buoyed by its recent successful capitalisation, is now a mid-tier
stock while NTS with limited trading activity is back in the Small Cap
Index.

The Top 10 Index was 2% higher to 91 886.78. Hippo rose 10.53% to 210 000c
and EcoCash added 8.29% to 19 078c.

The Medium Cap put on a marginal 0.62% to 926 216.74.  Cafca led the risers
with a 14.98% gain to 384 600 and Fidelity was 14.89% higher to 27 000c
taking its market cap to $29.41 billion.

Seed Co fell 13.83% to 86 169.6c becoming the day's worst performer.  Star
Africa declined 8.10% to 735.2c, Zimre Holdings dropped 5.14% to 17 497.81c
and Willdale shed 4.62% to 4 025.81c despite reporting improved
profitability in its full year results.

The VFEX had a positive start to the year, gaining 1.49% to 101.49. Axia led
the risers at 17.13% to 9.37 US cents and First Capital put on 8.37% to 2.2
US cents. Other marginal gains were seen in Innscor, Padenga and Zimplow.  

 

Turnover was at US$101 240 supported by volume in Axia and Innscor of 233
675 and 175 232 respectively. Foreigners sold US$4 464.84 worth of shares.

 

 

 

Global Currencies & Equity Markets

 

 

South Africa

 

South African rand kicks off 2024 on a weaker note

The South African rand was slightly weaker early on Tuesday, the first
trading day of 2024, as the US dollar crept higher on global markets.

 

At 0730 GMT, the rand traded at 18.3225 against the dollar , down about 0.2%
on its previous close.

 

The dollar was marginally firmer against a basket of global currencies.

 

With no major domestic economic data releases due on Tuesday, the rand is
expected to take its cues from offshore drivers.

 

The global market focus this week is on economic data that could shed more
light on the trajectory for US interest rates.

 

South African rand stable after week of gains

 

Minutes from the last US Federal Reserve meeting in December are scheduled
for release on Thursday and will provide insight into the central bankers'
thinking around rate cuts this year.

 

There will also be a US jobs report on Friday.

 

In South Africa, a whole-economy purchasing managers' index survey is due to
be published on Thursday.

 

On the Johannesburg Stock Exchange the Top-40 index was down 0.6% in early
trade.

 

The benchmark 2030 government bond was little changed, with the yield up 2
basis points to 9.79%.

 

 

 

 

 

 

 

Zambia

 

Zambian Kwacha: Worst Performing Currency Under UPND's Economic Policies

In a significant development, Zambia's Kwacha has tumbled to its lowest
point ever since the nation's independence, earning the dubious distinction
of being the worst performing global currency. The root cause is attributed
to the economic and financial policies executed by the United Party for
National Development (UPND) since they assumed power in 2021. Sean Tembo, a
prominent political figure, has been vocal about his criticism of these
policies and their detrimental impact on the Zambian economy.

 

The Decline of the Zambian Kwacha

The landslide in the value of the Zambian Kwacha is a result of a
combination of factors. Among these, the most notable are the challenges in
securing foreign financing, the exponential rise in import costs, and
rampant inflation. These elements have collectively destabilized the
national economy and contributed to the severe devaluation of the Kwacha.

 

The African Currency Crisis

However, the Kwacha's plight is not an isolated incident. Approximately a
dozen African currencies have seen a slump of at least 15% against the
dollar. This has led to a shortage of dollars, triggering devaluations and
central bank exchange controls in several countries. Zambia's Kwacha has
been particularly hard hit, weakening to a record low against the dollar and
pushing the nation into default on its eurobonds.

 

Impact on Domestic Economy and Foreign Investments

The absence of foreign financing has compelled governments to increase
domestic issuance, which in turn has escalated borrowing costs. Meanwhile,
the International Monetary Fund (IMF) is stepping in to provide financing to
bolster reserves in some instances. This financial crisis is also having a
ripple effect on consumers and local businesses, with soaring import costs
fueling inflation.

 

While the immediate scenario is bleak, countries with lesser foreign
exchange needs and sizeable foreign reserves are gaining traction among
investors. It's a stark reminder of the vital role strategic planning and
sound financial management play in stabilizing national economies and
safeguarding currency performance.

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global Markets

 

Dollar edges higher as risk rally hits pause

The dollar rose broadly on Wednesday and stood near a two-week high against
its major peers, underpinned by a confluence of factors including elevated
U.S. Treasury yields and a cautious turn in risk sentiment that weighed on
Wall Street.

 

Trading was thinned in Asia with Japan out on a holiday, and with investors
still returning from an extended New Year break, currencies traded mostly
sideways in early deals.

 

However, the New Zealand dollar

, often used as a proxy for risk appetite, slid to a two-week low of
$0.62485.

 

The Australian dollar

likewise hit a two-week trough of $0.6756.

 

The U.S. currency was broadly firm, enjoying some respite after having
fallen 2% last month and clocking its first yearly loss since 2020.

 

A surge in risk appetite at the end of last year - sparked by a dovish tilt
in the Federal Reserve's December policy meeting which further fueled bets
for U.S. rate cuts in 2024, had toppled the greenback and sparked a rally in
Treasuries and stocks.

 

That, however, failed to carry on into the New Year, with a bout of risk
aversion causing the S&P 500 and Nasdaq Composite to close their first
trading session of 2024 lower, dragged down by big tech names.

 

"We've just seen quite a significant reversal in risk sentiment in the last
24 hours," said Ray Attrill, head of FX strategy at National Australia Bank,
or NAB. "Higher U.S. yields, weaker U.S. stocks equals stronger dollar. I
think that's the simple story."

 

"The kiwi dollar, which has been one of the more risk-sensitive currencies,
has sort of underperformed versus most other currencies as well," said
Attrill.

 

A broadly stronger dollar also weighed on the euro and sterling, which had,
on Tuesday, clocked their worst daily performance in months.

 

The euro

was last at $1.0949 after having lost 0.95% on Tuesday, its largest daily
decline since July last year.

 

Sterling

similarly wobbled near a three-week low and changed hands at $1.2630, having
slid 0.87% in the previous session, its sharpest daily fall in nearly three
months.

 

The dollar index

hovered near a two-week peak and was last at 102.15 after having jumped
0.86% on Tuesday, which marked its best daily performance since March 2023.

 

The greenback was underpinned by a rebound in U.S. Treasury yields, which
saw the benchmark 10-year yield

hitting an over two-week high in the previous session.

 

Cash trading of Treasuries in Asia was closed on Wednesday given the holiday
in Japan.

 

Elsewhere, the yen

was little changed at 141.98 per dollar, after falling nearly 0.8% in the
previous session.

 

Analysts said the risk-off mood was also in part driven by concerns over
escalating geopolitical tensions, after Israel killed Hamas deputy leader
Saleh al-Arouri in a drone strike in Lebanon's capital Beirut on Tuesday.

 

"I suspect that markets (are) starting the year with finding it hard to
completely ignore geopolitics," said NAB's Attrill.

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets





Gold price enters 2024 with sights set on record highs

Gold investors anticipate record high prices next year, when the
fundamentals of a dovish pivot in US interest rates, continued geopolitical
risk, and central bank buying are expected to support the market after a
volatile 2023.

 

 

Spot gold is on track to post a 13% annual rise in 2023, its best year since
2020, trading around $2,060 per ounce.

 

"Following on from a surprisingly robust performance in 2023 we see further
price gains in 2024, driven by a trifecta of momentum chasing hedge funds,
central banks continuing to buy physical gold at a firm pace, and not least
renewed demand from ETF investors," Saxo Bank's Ole Hansen said.

 

On Dec. 4, gold hit a record high of $2,135.40 on bets of US monetary policy
easing in early 2024 after a perceived dovish tilt from Federal Reserve
Chair Jerome Powell, surpassing the previous record scaled in 2020.

 

The precious metal almost made uncharted territory in May this year as a US
regional banking crisis took hold. By October, it had retreated close to
$1,800 an ounce until safe-haven demand triggered by the Israel-Hamas
conflict spurred another rally.

 

 

Investors returned to the popular SPDR Gold Shares exchange-traded fund ,
which posted net inflows of over $1 billion in November.

 

A Reuters poll in October forecast prices will average $1,986.50 in 2024.
They have averaged above $1,950 so far this year, above any previous yearly
average price.

 

JP Morgan sees "a breakout rally" for gold in mid-2024, with a targeted peak
of $2,300 on expected rate cuts. UBS forecasts a record of $2,150 by
end-2024 if cuts materialize.

 

The World Gold Council, in its 2024 outlook, projected that a drop of about
40 to 50 basis points in longer maturity yields, following 75-100 points of
rate cuts, could translate into a 4% gain for gold.

 

Inflation risks

The conflict in the Middle East, uncertainty from elections in major
economies, and central bank purchases led by China will also boost
safe-haven bullion's appeal next year, analysts predicted.

 

But, "gold could be forced to unwind some of this year's gains if an
inflation resurgence forces the Fed to abandon plans for a policy pivot in
2024," said Han Tan, chief market analyst at Exinity.

 

Inflation cooling faster than the Fed trims rates may also slow the economy
and dent retail buying.

 

Heraeus Metals expects higher gold jewellery demand in top consumer China
this year, with more support possible in 2024 from stimulus measures.

 

By contrast, silver looks set to fall 1% in 2023, trading just under $24 an
ounce. It will trend towards $26 an ounce next year, benefiting from
improved industrial demand, according to TD Securities.

 

On track to fall 6% in 2023, platinum will hold a range between $800 and
$1,100 an ounce in 2024, Heraeus estimates.

 

The impact of the energy transition was demonstrated as
autocatalyst-dependent palladium fell by more than a third this year, the
market's worst performance since 2008.

 

Palladium , which fell below $1,000 an ounce in November - for the first
time in five years - before recovering, faces surpluses as electric vehicles
become more popular.

 

Bank of America expects palladium to average $750 per ounce in 2024 subject
to any major supply cuts.

 

 

 


 

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
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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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for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

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