Bulls n Bears Daily Market Commentary : 17 January 2024

Thu Jan 18 07:26:00 CAT 2024

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Bulls n Bears Daily Market Commentary : 17 January 2024

ZSE commentary

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

ZSE maintains steady gains.

The market maintained steady gains in the mid-week session to see the
primary All Share Index growing 5.38% to 302,788.42pts while, the Blue-Chip
Index gained 5.61% to 136,925.48pts. The Agriculture Index went up 4.51% to
721.96pts while, the Mid Cap Index rose 2.34% to 1,066,199.80pts. The trio
of AFDIS, Meikles and BAT headlined the top performers after surging a
similar 15.00% to end the day pegged at $3,438.5000, $2,645.0000 and
$14,982.5000 in that order. Construction group Masimba Holdings edged up
14.69% to $1,220.0000 as tea producer Tanganda capped the winning pack on a
11.91% uplift to end the day pegged at $1,135.9000. Contrastingly, insurers
FML led the laggards of the day on a 9.61% drop to $900.0000 while, sugar
processor Hippo Valley eased 2.09% to settle at $2,251.9596. Star Africa
pared off 1.15% to $9.4266 as Zimre Holdings Limited declined 0.11% to
$173.7994. Proplastics capped the losers of the day on negligible 0.0002%
retreat to end at $739.4500. 

Activity aggregates declined in the session as volume traded succumbed
44.62% to 3,23m shares while, turnover dipped 33.91% to $4.45b. Econet was
the most sought-after stock in today's activity after contributing 63.08% to
the total volume exchanged and 61.59% of the value outturn. Other notable
volume drivers were FML (13.95%), Hippo Valley (4.95%) and Star Africa
(3.93%). The trio of Delta, FML and Hippo valley contributed a combined
26.54% to the total value traded.  A total of 175,540 units exchanged hands
on the ETF section which saw only two ETS's registering price movements.
Datvest ETF notched up 6.02% to close at $12.7750 while, OMTT ETF rose 8.78%
to end the day pegged at $48.9506. Tigere REIT was 3.58% higher to close at
$403.9741 after 83,447 units exchanged hands on the ETF section with no
trades recorded in Revitus.-efe

Global Currencies & Equity Markets

South Africa

South African rand extends losses against strong dollar

JOHANNESBURG: South Africa's rand extended its losses against the US dollar
early on Wednesday, as the greenback hovered near a one-month high due to
lowered expectations for a March rate cut.

At 0750 GMT, the rand traded at 19.0225 against the dollar, about 0.3%
weaker than its previous close, after losing more than 1% against the dollar
the previous day.

The dollar was last up about 0.14% against a basket of global currencies.

The dollar has surged this week due to hawkish comments by European Central
Bank and Federal Reserve officials which suggested the Fed might wait longer
than previously expected to cut rates.

Statistics South Africa will release retail sales figures for November at
1100 GMT.

South African rand weakens as Red Sea tensions push dollar up

Economists polled by Reuters have predicted a year-on-year decrease of about
1.1%. On the stock market, the Top-40 index was down 1.72% while the broader
all-share was down 1.56% in early trade.

South Africa's benchmark 2030 government bond was weaker in early deals,
with the yield up 2.5 basis points to 9.835%.

Nigeria

The Nigerian naira (NGN) is melting away and it is not alone

The Nigerian naira remained under intense pressure as the US dollar index
(DXY) bounced back and as concerns about the economy remained. According to
TradingView, the USD/NGN pair surged to a record high of 955 on Tuesday. The
situation worsened in the black market, where the currency plunged to 1,305.
This situation has pushed the spread between the official and the street
exchange rate to almost 40%.

The Nigerian naira plunge happened as the government revealed that inflation
continued its uptrend in December. According to the statistics agency, the
headline Consumer Price Index (CPI) in Nigeria surged to a 27-year high of
28.9% in December. This is much higher than the Central Bank of Nigeria's
(CBN) target of between 6% and 8%. 

Therefore, there is a likelihood that the bank will continue hiking interest
rates to stem this inflation. The challenge is that it is unclear when the
Nigerian Central Bank will hold its next meeting since its last one happened
in July last year.

Economists have mixed views on whether interest rate hikes in emerging and
frontier economies work well to stem inflation. In most cases, people in
these countries don't have enough savings in the first place. Also, high
interest rates tend to affect economic growth by limiting lending and
increasing non-performing loans (NPL) in the banking sector

The other challenge hitting the Nigerian naira is the ongoing demand for the
US dollar from both individuals and companies. Most of these individuals are
continually moving to the USD to hedge against naira depreciation. In a
note, Mohammed Abubakar, the head of Forward Marketing Exchange told
Bloomberg:

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the
Invezz newsletter, today.

"Dollar demand has risen steadily since the start of January, from
businesses that want to restock goods or their raw materials as well as
individuals needing dollars for studies abroad."

Dollar scarcity in emerging markets has escalated in the past few years
because of the rising interest rates in the United States. The Fed has hiked
rates to between 5.25% and 5.50%, the highest level in over two decades.
This, in turn, has led to investors pulling money to US assets. 

The Nigerian naira is not the only EM currency that has plunged to a record
low against the US dollar. In Kenya, the shilling plunged to 160 against the
dollar, meaning that it has lost over 60% of value in the past three years.

Similarly, in Tanzania, the shilling (TZS) has dropped to 2,520, a few
points below its all-time low of 2,540. In Turkey, the lira has slipped to
30, continuing a trend that has happened in the past few decades. Other top
underperforming currencies are the Ethiopian birr, Zambian kwacha, and the
Angolan kwanza.

The Nigerian naira and these other currencies will likely remain on edge as
the crisis in the Middle East escalates. The impact of this crisis is that
it has pushed inflation higher, putting the Fed in a bind when it comes to
interest rate cuts. As such, hopes of a rate cut in March have now
disappeared as Christopher Waller warned on Tuesday.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar holds near one-month peak as dovish Fed bets recede

The dollar held close to a one-month peak versus major peers on Thursday
after robust U.S. retail sales data overnight added to building expectations
the Federal Reserve will not rush to lower interest rates.

Australia's dollar weakened after data showed an unexpected decline in
employment.

The U.S. dollar index

, which measures the currency against a basket of six rivals, traded little
changed at 103.36 in the Asian morning, after reaching 103.69 on Wednesday
for the first time since Dec. 13.

The yen was a notable underperformer, as it tends to move in the opposite
direction of U.S. long-term yields

, which also touched a one-month high overnight as dovish Fed bets receded.
At the same time, investors steadily priced out hawkish Bank of Japan
wagers, not least due to the devastating New Year's Day quake in central
Japan. The BOJ meets on policy on Monday and Tuesday of next week.

Traders have trimmed the odds of a first Fed rate cut by March to 53.8%,
down from 63.1% on Tuesday, according to CME's FedWatch Tool.

The market is still pricing in a likely 150 basis points of cuts by the end
of the year, even as Fed officials including Governor Christopher Waller
this week pushed back against expectations of rapid policy loosening.

Interest rate pricing "appears overly optimistic given the latest retail
sales report shows the U.S. consumer remains in good shape," Tony Sycamore,
an analyst at IG wrote in a client note.

On the dollar's push as high as 148.525 yen

overnight for the first time since the end of November, surpassing
Sycamore's expectations for a test of 148, Sycamore wrote "given the speed
of the rally, it does raise questions about our view that the rally is
countertrend."

The dollar was last about flat at 148.135 yen.

Meanwhile, the euro

was little changed at $1.08845.

ECB President Christine Lagarde told Bloomberg there would likely be
majority support among ECB officials for an interest rate cut in the summer,
although she stressed they would be data-dependent.

Sterling

was also flat at $1.26765, following a rally on Wednesday after data showed
inflation unexpectedly accelerated in December, reinforcing expectations the
Bank of England will be slower to cut rates than its peers.

The British currency's 0.31% overnight jump snapped a three-day decline
against the greenback, and limited Wednesday's gains for the dollar index,
of which Sterling is a part.

Elsewhere, the Australian dollar

weakened after data showed a 65,100 drop in jobs for December, where
economists had forecast a 17,600 increase.

The Aussie slid as much as 0.4% to $0.65255 before last trading 0.14% lower
at $0.65425.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price drops to near $2,000 on hawkish Fed comments

Gold fell to its lowest in a month on Wednesday following hawkish comments
from a US Federal Reserve policymaker who tamed expectations of an imminent
rate cut, sending both the dollar and Treasury yields higher.

Spot gold dropped 1.1% to $2,004.78/oz. by noon ET, its lowest in 2024 after
starting the new year around the $2,065/oz. level. US gold futures were also
down 1.1% to about $2,007.50/oz.

In the opposite direction, the US dollar index hovered at a one-month high
following Fed Governor Christopher Waller's comment that the central bank
should not rush to cut rates until lower inflation can be sustained. Yields
on the benchmark 10-year Treasury notes also gained.

"The markets are having doubts about interest rate cuts if the Fed can cut
sooner than later, which is pressuring gold prices. With the dollar being
strong and cuts taking time, it is hard for gold to hold a rally," said Bob
Haberkorn, senior market strategist at RJO Futures, in a Reuters note.

"However, geopolitical risk will keep providing a base to prices and hold
them around $2,000," he added.

Traders are now pricing in around a 61% chance of a rate cut in March,
compared to around 73% before Waller's comment, according to CME FedWatch
tool.

While a March rate cut is less likely than before, the general expectation
remains that the US central bank will begin lowering interest rates in 2024,
boosting the long-term outlook for gold.

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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