Bulls n Bears Daily Market Commentary : 18 January 2024

Fri Jan 19 08:48:11 CAT 2024

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Bulls n Bears Daily Market Commentary : 18 January 2024

ZSE commentary

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

Stocks maintain record run; Industry concerns about economy grow

HARARE - The stock market continued to trade through a good January,
maintaining its record run that has seen it shoot past key levels amid
heightened uncertainty over the direction that the economy will be taking
this year, despite the modest growth that is expected.

While the Reserve Bank of Zimbabwe governor John Mangudya says that the
current depreciation of the local currency is a temporary phase,
Confederation of Zimbabwe Industries president Kura Matsheza believes that
failure to arrest the loss in value on time, will make it more difficult for
industry to recover at the same time pushing business to full dollarisation,
which is uncompetitive for manufactured products. The ZWL is now being
quoted between 13 000 and 14 000.

The All Share Index gained 4.36% to 315 981.47 with a year-on-year gain of 1
361% on the same period last year. Market bias remained strongly positive
after 19 stocks recorded gains against four fallers.

Turnover at $4.43 billion was supported by trades in Delta, First Mutual and
EcoCash. Delta contributed the most to value at $1.23 billion while it was
EcoCash which led in volume at 4.67 million shares. Total volume closed at
6.72 million shares. Trades amounted to 269 with Delta the most active at
42. Foreigners were net sellers at $131.32 million against purchases of
$12.76 million.

The Top Ten Index added 4.36% to 142 898.60. BAT Zimbabwe led the risers,
gaining 15% to 1 722 985c and Econet put in 14.97% to 157 433c on news that
it will now acquire spin-off EcoCash's non-banking assets as part of a
reconstruction exercise. EcoCash was 2.03% higher to 157 433.58c.

CBZ was, however, 0.28% lower to 510 000c. 

The Medium Cap Index rose 4.28% to 1,111,875.29. NMB surged 15% to 84 875c
and Fidelity Life was 14.84% higher to 35 600c. Dairibord added 13.46% to 80
000c in a low value trade of 400 shares.

Edgars, which is undergoing some restructuring, was the worst performer with
an 8.05% drop to 16 000c.  

Star Africa dropped 3.80% to 906.87c and Ariston shed 0.08% to 4 696.3c.

Meikles, a pacesetter on YTD at 112.12%, was unchanged at 264 503.54.

On the VFEX, turnover was strong at US$1.29 million led by Simbisa's 4.01
million shares. Trades totalled 27 with Simbisa and Innscor the most active.
The All Share Index was 1% higher to 94.45. First Capital led the risers
with a 4.17% gain to 2 US cents and Simbisa put on 5.30% to 31.99 US cents.
Innscor was up a marginal 0.38%.

Global Currencies & Equity Markets

South Africa

South African rand firms as mining output rises

(Reuters) - South Africa's rand strengthened on Thursday after monthly
mining figures showed an increase in production.

At 1619 GMT, the rand traded at 18.9475 against the dollar , 0.6% stronger
than its previous close.

The country's total mining output (ZAMNG=ECI), opens new tab rose 6.8% year
on year in November after a revised increase of 3.6% the previous month,
Statistics South Africa data showed.

Analysts polled by Reuters had predicted a 3% increase in November.

However, declines were recorded in the production of diamonds, manganese ore
and gold, local data showed.

"Notwithstanding November's result, which was buoyed in part by base
effects, the fragile global environment continues to weigh on commodity
demand," Investec analyst Lara Hodes said in a research note.

Shares on the Johannesburg Stock Exchange closed higher, with the broader
all-share index (.JALSH), opens new tab up 0.91% and blue-chip Top-40 index
(.JTOPI), opens new tab up 1.0%

South Africa's benchmark 2030 government bond was firmer, with the yield
down 3 basis points to 9.795%.

Malawi

Malawi Kwacha remains stable after 44% devaluation

The Malawi Kwacha has remained stable two months after the 44 percent
devaluation, confirming government stance that the devaluation was the
necessary devil.

The Reserve Bank of Malawi (RBM) devalued the local unit on November 9, 2023
to align the currency's value with the market forces.

Over eight weeks since then, the currency remains at 1,700kwacha to a dollar
despite the RBM conducting forex auctions bimonthly.

This is a measure aimed at ensuring free movement of the exchange rate.

According to the Reserve Bank of Malawi statement, the latest forex auction
raised US$400,000 US at a fixed rate of K1,700 per dollar hence the
stability of the exchange rate.

Meanwhile, a governance and human rights advocate has hinted that the
country is showing positive signs of economic recovery.

Undule Mwakasungula cites austerity measures on presidential trips, abroad,
but argues that such trips attract aid and expanded investment
opportunities.

Last year, President Lazarus Chakwera cancelled all his international trips
in a bid to save resources amid the economic crisis.

Malawi relies on foreign aid and investments to support its development
goals.

Mwakasungula therefore appeals to Malawians to raise hope of significant
economic recovery.-nyasatimes

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar headed for second weekly gain on tempered rates outlook

(Reuters) - The dollar headed for a second weekly gain in a row on Friday as
signs of resilience in the U.S. economy and caution about rate cuts from
central bankers had traders dialling back expectations of swift and sharp
falls in interest rates.

Weekly gains on the risk-sensitive Australian and New Zealand dollars of
1.6% and 2.3% are set to be the largest since November and July
respectively. Markets price a 57% chance of a U.S. rate cut in March, down
from 75% a week ago.

"The thumping message from U.S. activity data and central bankers is that
markets are too aggressively priced for rate cuts in 2024, both on timing
and in magnitude," said Westpac's head of foreign exchange strategy Richard
Franulovich.

"That, and a fresh bout of turbulence across China's property and financial
markets has the dollar returning to form."

The dollar index is up 0.9% to 103.4 on the week and biggest loser has been
the yen , which is now down 5% for the year so far as data and a deadly
earthquake have sapped confidence the Bank of Japan is about to hike rates.

Data on Friday showed Japan's core inflation slowed to 2.3% in the year to
December, its lowest annual pace since June 2022, taking the pressure off
policymakers to make swift moves and dragging the yen about 0.2% lower to
148.44 per dollar.

"The market's realisation that rates hikes will not be easy for the BOJ in
the coming months and the coincident repricing of Fed rate cut risks have
already been reflected in the move higher in dollar/yen," said Rabobank
strategist Jane Foley.

Other currency moves in the Asia session were modest on Friday, leaving the
euro down 0.6% for the week at $1.0884 and sterling down 0.4% to $1.2705.

The Aussie caught a little support from stabilising iron ore prices and rose
0.1% to $0.6578. The kiwi was shaky at $0.6099.

HAWKISH CHORUS

U.S. labour-market data released on Thursday was strong, with weekly jobless
claims dropping to their lowest level in nearly 1-1/2 years, adding to the
pressure on market rate-cut wagers.

Two-year Treasury yields , which track short-term interest rate
expectations, are up 22 basis points this week to 4.3587%.

Earlier data showed retail sales rose more than expected in December.
Federal Reserve Governor Christopher Waller said on Tuesday the U.S.
economy's strength gives policymakers flexibility to move "carefully and
slowly", which traders took as pushing back at pricing for a speedy fall in
rates.

A similarly hawkish chorus from European central bankers has also dialled
back expectations for cuts in Europe, limiting the euro's fall on the dollar
and driving gains for crosses such as euro/yen and euro/swissy .

An unexpected rise in British inflation also drove a sharp pullback in bets
on Bank of England interest rate cuts and lent support to sterling.

Deepening malaise in China's property markets rattled investors, who sold
mainland shares to multi-year lows and the currency to an almost two-month
low of 7.1999 per dollar, drawing state-bank buying to support it.

Bitcoin hit a five-week low at $40,484 overnight as traders have taken
profits following the U.S. approval of spot bitcoin exchange-traded funds.
Speculators drove the price 150% higher during 2023 in anticipation the
approval paved the way for large-scale investors to buy the cryptocurrency.

Investors poured $1.9 billion into nine new bitcoin ETFs in their first
three trading days, but that fell short of some of the more aggressive
estimates for multi-billion inflows on day one.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold heads for worst weekly fall in six as rate-cut view tempers

Three 1kg gold bullion bars worth over 155,00 GBP lay on the counter in a
gold dealers in Birmingham's jewelry quarter on December 13, 2023 in
Birmingham, England. Gold prices have increased since the Ukraine War but
have soared to record highs since the start of the Hamas-Israel war. Other
factors are the weakening US dollar and expected rate cuts from the Federal
Reserve. 

Gold prices were headed to mark their biggest weekly drop in six on Friday,
driven by a robust dollar and higher bond yields as U.S. central bankers
pushed back against expectations of early rate cuts amid signs of resilience
in the economy.

Spot gold

was little changed at $2,022.07 per ounce by 0404 GMT, but has fallen 1.3%
so far in the week.

U.S. gold futures

rose 0.1% to $2,024.10.

Bullion was pressured as traders repriced their rate-cut expectations,
following better than expected data and hawkish Fed speakers, Hugo Pascal, a
precious metals trader at InProved, said.

The repricing offset safe-haven premium from geopolitical risks in the
Middle east, Pascal said, adding that "as long as gold holds above $2,000
level, I remain positive on the metal."

The U.S. dollar index

was down 0.2% for the day but up nearly 1% so far this week. A stronger
dollar makes greenback-denominated gold more expensive for foreign currency
holders. 

Yields on the benchmark U.S. 10-year Treasury notes

touched a fresh five-week high of 4.1710%. 

Atlanta Federal Reserve President Raphael Bostic said he was open to lower
rates sooner than he had anticipated, depending on how quickly inflation
falls, but that the baseline was for rate cuts to start in the third
quarter.

Markets were betting on 139 basis points (bps) of Fed rate cuts this year,
down from 150 bps a week earlier, according to LSEG's interest rate
probability app, IRPR.

The odds of a Fed rate cut in March have dropped to 54% from about 71% last
week, according to IRPR.

Lower interest rates decrease the opportunity cost of holding bullion.

Spot silver

fell 0.3% to $22.68 per ounce, platinum

climbed 0.2% to $909.06, and palladium

gained 0.7% to $944.63

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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