Bulls n Bears Daily Market Commentary : 24 January 2024

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Bulls n Bears Daily Market Commentary : 24 January 2024

 

 	

 

 

 	


ZSE commentary

 

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

Equities march ahead as ZNCC pushes for IMTT correction

 

HARARE - Equities continued to march forward in record territory although
turnover momentum continued to be concentrated in a few stocks.

The All Share Index added 3.24% to 392 630.51 in a session which yielded 20
risers and three fallers. Market capitalisation was at $31.9 trillion or
US$3.39 billion using the interbank rate of 9 414.44. A total of six
heavyweight stocks now carry a value of above $1 trillion with Delta leading
at $10.08 trillion.

Turnover was at $7.33 billion supported by Delta ($4.62 billion) and Econet
($1.35 billion). Volume amounted to 2.54 million shares in 289 transactions.
Foreigners sold $829.63 million, mostly out of FBC and purchases were at
$789.8 million. 

 

The Top Ten Index put on 2.26% to 1278 727.74 and is now close to doubling
its January gains at 98.40%.

BAT Zimbabwe and First Mutual hit limit up to 3 012 569.93c and 138 290c
respectively. EcoCash rose 14.99% to 31794.74c while marginal gains were
seen in Econet and Delta. 

 

CBZ was, however, 3.47% lower to 550198.02c.

The Medium Cap Index was the standout performer with a 5.84% gain to 1 345
787.40. Truworths led the day's risers gaining 35.61% to 7 040c as investors
continue to await its reconstruction and restructuring following last year's
successful capital raise.    Nampak and Tanganda each rose 15% to 43 585c
and 213 520c, respectively. 

 

Fractional losses were recorded in Star Africa and Zimre Holdings.

The Old Mutual Top Ten ETF rose 15% to 6549c while gains in the Datvest MCS
and the Morgan & Co MIZ were fractional. Total turnover was at $4.68
million.

Turnover on the VFEX was subdued at US$14 866.87 after 159 632 shares
traded. Simbisa shed 2.04% to 35.02 US cents to send the All Share lower by
0.35% to 97.67.

Meanwhile, local businesses are set to engage the Zimbabwe Revenue Authority
(Zimra) to expedite the correction of calculating the 2% Intermediary Money
Transfer Tax (IMMT) on amounts exceeding US$500 00.  

 

ZNCC President Mike Kamungeremu, whose lobby group has long called for the
abolishing of the tax, said that engagements with the authorities have been
slow but remain "work in progress". 

 

IMTT has a rate of $0.02. Any transaction exceeding equivalent in ZWL of
US$500 000 has a maximum tax of US$10,150 (at the Interbank Rate) payable in
ZWL. For foreign currency, rate of tax is USD0.01. Any transaction exceeding
USD500 000 has a maximum tax of USD10 150.

Zimra said they are currently seized with correcting the error as business
will continue to pay more than what they should as the error is engraved in
law.

"IMTT is still 2 cents per $ with the maximum threshold at US$500 000 or
Zimbabwean equivalent. Anything above US$500 000, the tax is US$ 10150.
That is what is in the law right now.  But we have noted that there is an
error as 2% of that figure is US$10 000. The same can be said for the US$
IMTT," said Zimra

The authority was, however, tight lipped when asked if the companies will be
able to recoup the extra money they have been paying, before the abnormally
was spotted.

-finx

 

 

Global Currencies & Equity Markets

 

 

South Africa

 

USD/ZAR: Rand off 3-month low ahead of CPI, SARB decision

The South African Rand gained against the US Dollar, while pulling back from
a three-month low, ahead of South African CPI inflation report and South
African Reserve Bank's (SARB) policy decision on Wednesday and Thursday
respectively.

 

The SARB is largely expected to leave its benchmark interest rate without
change at 8.25% at its January meeting.

 

SARB Governor Lesetja Kganyago had said that inflation would need to ease
sustainably to around 4.5% before the central bank could consider cutting
interest rates.

 

The CPI inflation data for December, due out a day before the SARB's
interest rate decision, will also be closely watched by Rand traders.

 

South Africa's annual headline inflation probably decelerated further in
December, to 5.2%, according to market consensus, from 5.5% in November. If
so, the inflation rate would be within the SARB's 3%-6% target band for a
seventh straight month.

 

As of 8:02 GMT on Wednesday USD/ZAR was retreating 0.69% to trade at
18.8972. Earlier this week, the exotic Forex pair went up as high as
19.2165. The latter has been the pair's strongest level since October 26th
2023 (19.2710).

 

 

 

 

Nigeria

 

Nigeria central bank aims for 21% inflation, seeks to support naira

(Reuters) - Nigeria's central bank aims for inflation to fall to about 21%
and will work to strengthen the country's undervalued naira currency ,
Governor Olayemi Cardoso said on Wednesday.

Cardoso faces pressure to raise interest rates when the Central Bank of
Nigeria (CBN) holds a rate-setting meeting next month for the first time
since he took office in September.

Inflation in December hit 28.92% (NGCPIY=ECI), opens new tab, its highest
level in more than 27 years.

 

 

"Inflationary pressures are expected to decline in 2024 due to the CBN's
inflation-targeting policy, which aims to rein in inflation to 21.4%,"
Cardoso said in a speech, a copy of which the central bank shared by email.

He added improved agricultural output and the easing of global supply chain
pressures would boost consumer confidence and purchasing power.

Nigeria's central bank is expected to pursue a more conventional monetary
policy approach under Cardoso after years of unorthodox policies pursued by
his predecessor, Godwin Emefiele.

 

 

In November, Cardoso announced the adoption of an inflation-targeting
framework.

President Bola Tinubu made a series of reforms after becoming head of state
last year, including scrapping a petrol subsidy and easing currency trading
restrictions.

But the country still has a shortage of forex and suffers as a result of a
wide gap between the official and parallel market exchange rates.

"We believe that the naira is currently undervalued and, coupled with
coordinated measures on the fiscal side, we will expedite genuine price
discovery in the near term," Cardoso said. "This coordinated approach will
contribute to a more balanced and stable exchange rate."

 

 

Cardoso said the CBN was trying to improve liquidity in the foreign exchange
market, reiterating a pledge to clear outstanding FX obligations after
paying at least $2 billion of the estimated $7 billion owed.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

Global  Markets

 

US dollar falls ahead of GDP, inflation data; Fed in focus

(Reuters) - The U.S. dollar dropped on Wednesday, taking a breather from
recent gains, as investors consolidated positions and looked to economic
data this week and the Federal Reserve policy meeting next week for more
clues about the start of the easing cycle.

 

The currency, however, cut its losses after data showed business activity in
the world's largest economy picked up in January and a measure of inflation
eased. A gauge of prices charged by companies for their products fell to the
lowest level in more than 3-1/2 years, data showed.

 

Investors are now looking to Thursday's first reading of the U.S. gross
domestic product for the fourth quarter, and another inflation reading - the
personal consumption expenditure (PCE) data - on Friday.

"We may see a little more dollar strength in the near term as we have
effectively seen a repricing the risk around Fed rate cuts," said Shaun
Osborne, chief FX strategist at Scotiabank in Toronto.

 

The bets on rate cuts this year were "too aggressive" in December so the
market had to adjust a little bit, Osborne noted. "So slightly higher U.S.
rates should get the dollar some support. The economic numbers over the next
couple of days would be crucial."

 

The dollar index slid 0.2% to 103.26 after climbing to a six-week peak on
Tuesday. Since the beginning of the year, the dollar has gained around 1.7%
this year as stronger-than-expected data and a pushback from central bankers
caused the market to rein in expectations for rapid Fed cuts this year.

Advertisement . Scroll to continue

Analysts said the U.S. currency is still in the middle of a correction
higher. The dollar fell 1.2% in December and 1.5% in November, as Fed
officials made dovish comments that suggested the central bank was nearing
the end of its tightening cycle.

 

"The correction in the dollar from the decline in Q4 2023 may not be over
yet, although momentum indicators are getting stretched," said Marc
Chandler, chief market strategist, at Bannockburn Forex in New York.

 

He added that the generally stable U.S. economic picture should be enough to
further reduce the odds of a March rate cut.

 

On Wednesday, U.S. rate futures market priced in a roughly 40% chance of
easing at the March meeting, down from late Tuesday's 47% probability and
the 80% chance factored in two weeks ago, according to LSEG's rate
probability app.

 

For 2024, futures traders are betting on five rate cuts of 25 basis points
each. Two weeks ago they expected six.

 

The Fed is set to meet next week and is widely anticipated to hold interest
rates steady.

The dollar was down 0.5% against the yen at 147.58.

 

The yen's rally tracked the rise in Japanese bond yields , which leaped to
six-week highs. Bank of Japan chief Kazuo Ueda said on Tuesday the prospects
of achieving the central bank's inflation target were gradually increasing,
adding to expectations that the country might soon leave behind its
ultra-loose monetary policy.

Strong Japanese export data on Wednesday added to the positive mood.

 

ECB MEETING COMING UP

The euro was last up 0.3% at $1.0885 after falling to a six-week low the day
before. It extended its rise after purchasing managers' index (PMI) surveys
showed the euro zone economy's downturn eased somewhat in January, although
it remained sluggish.

 

Also this week, the ECB meets on Thursday and could give hints on when euro
zone borrowing costs might start falling.

 

The onshore yuan strengthened after , touching a three-week high of 7.142 to
the dollar.

On Wednesday, China's central bank announced a deep cut to bank reserves, in
a move that will inject about $140 billion of cash into the banking system
and send a strong signal of support for a fragile economy and plunging stock
markets.

Sterling also climbed after a strong PMI reading caused traders to further
dial back their bets on Bank of England rate cuts this year, a process that
was kick-started by a stronger-than-expected inflation reading earlier this
month.

 

The pound was last 0.3% higher at $1.2725.

Also on Wednesday, the Bank of Canada held its key overnight rate at 5% and
said while underlying inflation was still a concern, the bank's focus is
shifting to when to cut borrowing costs rather than whether to hike again.

 

The U.S. dollar rose 0.2% versus the Canadian unit to C$1.3486.

In cryptocurrencies, bitcoin rose 1.8% to $39,875 .

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets


Gold stumbles on strong US data, as traders strap in for more

(Reuters) - Gold eased on Wednesday after data showed strong U.S. business
activity, even as a weakened dollar limited losses, while investors looked
ahead to more economic indicators to assess when the Federal Reserve might
first cut interest rates.

 

Spot gold was down 0.7% at $2,014.56 per ounce at 2:13 p.m. ET (1913 GMT),
eyeing its worst session in a week. U.S. gold futures settled 0.5% lower at
$2,016.00.

 

 

"Gold prices are pretty insulated from a hawkish repricing in rates markets,
because there are signs that investors are historically under-positioned in
gold despite markets expecting an imminent start to the Fed's cutting
cycle," said Daniel Ghali, commodity strategist at TD Securities.

 

U.S. business activity picked up in January and inflation appeared to abate,
an S&P Global survey showed.

A strong U.S. economy and pushback from central bank officials is leading
some investors to rethink their bets on how quickly the Fed will cut rates
this year.

Lower interest rates reduce the opportunity cost of holding non-yielding
bullion.

According to the CME's FedWatch Tool, opens new tab, markets expect the Fed
to keep interest rates unchanged at its Jan. 30-31 policy meeting and have
pushed back the timeframe of the first interest rate cut.

 

 

 

The dollar slipped 0.4% against its rivals, making greenback-priced bullion
cheaper for overseas buyers.

"China is putting together a more comprehensive package to stem the
pervasively pessimistic sentiment that has plagued their markets for months
which is weighing on the broad U.S. dollar," Ghali added.

China's central bank announced a deep cut to bank reserves that will inject
about $140 billion of cash into the banking system.

 

 

Investors are now focusing on the fourth-quarter advance U.S. GDP estimates
on Thursday, and personal consumption expenditure data on Friday.

Spot silver rose 1.2% to $22.7 per ounce, platinum was up 0.23% to $902.18
and palladium rose 1.65% to $963.59.

 

 

 


 

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
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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for guideline purposes only and sourced from third parties.

 

 	

 

 

 	

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