Bulls n Bears Daily Market Commentary : 04 July 2024

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Bulls n Bears Daily Market Commentary : 04 July 2024

 

 	



 

 	


ZSE commentary

 

ZSE Market continues to surge...

The ZSE market continued to surge in the penultimate session of the week to
see the mainstream All Share Index charging a further 5.32% to 145.21pts
while, the ZSE Top Ten Index advanced 4.40% to 153.53pts. The ZSE
Agriculture Index added 4.38% to end at 118.98pts as the Mid Cap was the top
gainer amongst the indices that we review with a 6.31% jump to 126.89pts .
Financial   services   group  ZB  surged   15.00%  to $4.8965, trailed by
Mashonaland Holdings that soared 14.89% to $0.1910. RTG put on 14.87% to
settle at $0.2810 as Ecocash hopped 14.84% to set at $0.2765. Life assurer
Fidelity capped the top five winners of the day on a 14.40% uplift to
$1.2013. Leading the fallers of the day was Zimre Holdings Limited that
succumbed 12.92% to $0.2706. Following was Masimba Holdings that trimmed
3.75% to $1.5400 with brick makers Willdale retreating 2.07% to $0.0386 .
Telecoms giant Econet slipped 0.08% to $3 .0405 as beverages concern Delta
let go 0.03% to $10.0305 .

 

Volume of shares traded dipped 95.37% to 1.0lm yielding an outturn of $4.42m
which was 63.60% lower from prior session. Volume. leaders of the day were
Econet, Delta, Willdale and Star Africa with a combined contribution of
82.42% to the outturn. Delta and Econet claimed 68.46% and 24.35% of the
value aggregate apiece. The Old Mutual ETF rose 0.65% to $0.1498 while,
Morgan and Co MCS grew 0.18% to $0.4200. The MIZ ETF was the only faller in
the ETF section after shedding 0.41% to $0.0100. The Cass Saddle and the
Datvest MCS were stable at $0.0100 and $0.0200 apiece. A total of 117,370
units worth $7,258 .46 were swapped in the five ETFs. The Tigere REIT
tumbled 11.46% to $0.7190 as 734,615 units traded in the name while, the
Revitus Property was stable at $0.3450 on 300 units.

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity South Africa

 

South South Africa

 

South African rand extends gains on U.S. rate cut bets

(Reuters) - The South African rand extended its gains against the dollar on
Thursday after the U.S. currency slipped on rising expectations that U.S.
interest rate cuts are on the way.

At 1534 GMT, the rand traded at 18.2675 against the dollar , more than 0.8%
stronger than its previous close.

The dollar index last traded down almost 0.2% against a basket of
currencies.

"The recent recovery over the past two days is largely influenced by
external factors rather than domestic ones, with today's U.S. holiday
providing some support for the rand," said Zain Vawda, market analyst at
MarketPulse by OANDA.

 

 

The rand, which had a turbulent time earlier in the week, extended its rally
from Wednesday, as markets priced in a potential U.S. rate cut as early as
September.

Weak economic data out of the U.S. and minutes of the Federal Reserve's June
meeting on Wednesday acknowledged the country's economy appeared to be
slowing and price pressures diminishing.

With a South African government formed and sworn in after elections on May
29, and few major local economic reports due in the week ahead, the rand is
set to take cues from global drivers like U.S. monetary policy.

 

 

On the stock market, the Top-40 (.JTOPI), opens new tab index closed more
than 0.4% higher.

South Africa's benchmark 2030 government bond was also stronger, as the
yield fell 3 basis points to 9.785%.

 

 

 

 

 

Nigeria

 

Naira opens window for firms' asset revaluation

Loss-making firms in Nigeria can revalue their assets and return them to a
positive net position, thanks to naira devaluation.

 

At an event co-organised by BusinessDay and Diya Fatimilehin & Co on
Thursday, financial analysts said the current naira situation can provide a
buffer for loss-making firms.

 

Jamiu Olakisan, partner and assurance leader, EY, said that the devaluation
of the naira offers a rebound opportunity for firms' assets.

 

"It has led to several companies looking at options of valuation of the
assets that they carry in their financial statements," Olakisan said at the
event entitled, 'Decoding Valuation Standards: Implications for Financial
Reporting and Investments,' in Lagos.

 

Nigeria's naira, which is down by around 70 percent since last year, has
seen many firms in Africa's largest economy record materially higher net
forex losses, resulting in significant loss after tax.

 

 

Read also: CBN to sanction banks for rejecting overcirculated naira
banknotes

 

Ten consumer goods firms in Nigeria incurred a combined foreign exchange
loss of N987.7 billion in 2023 on the back of naira devaluation, compared to
the previous year when nine of them lost around N129.8 billion, according to
data compiled by BusinessDay.

 

This loss has led to many company shareholders' funds closing at a negative
balance.

 

There are two methods used in valuations of assets: the cost approach method
and revaluation method.

 

When a company's fixed assets such as property, plant, & equipment
experience substantial changes in their market prices, the company must
account for changes in value using either the cost method or revaluation
techniques.

 

 

On the other hand, revaluation method of a fixed asset is the accounting
process of increasing or decreasing the carrying value of a company's fixed
asset or group of fixed assets to account for any major changes in their
fair market value.

 

Olakisan said that companies are allowed to switch between different models
of accounting but such companies must disclose such to investors.

 

"If a company switches to the revaluation method, it means it was previously
using a cost model and needs to carry out an extensive disclosure that
clearly states that its policy has changed from what it used to be."

 

He said that the IFRS 13 standard prohibits, though not directly, that such
a company goes back to an initial model after using a new one and requires
that the new method is revised frequently, usually between three and five
years.

 

"When the revaluation method gives you a gain, it doesn't go to the income
statement but the comprehensive statement and the revaluation reserve and
then it boosts shareholders' fund," he said.

 

MA

 <mailto:info at bulls.co.zw> 

Global Global Markets

 

Dollar on defensive after soft data, battered yen under watch

(Reuters) - The pound and the euro gained against the dollar on Thursday
after weak U.S. economic data sent the greenback lower the previous day, as
voting began in Britain and the French election neared.

Sterling was last up a whisker at $1.2757, after gaining 0.46% the previous
day and touching a three-week high, while the euro was at $1.0801, up 0.1%
after a gain of 0.4% on Wednesday and reaching a three-week top. ,

The pound is now up on the year against the dollar, making it the best
performing G10 currency in 2024.

The dollar fell on softer-than-expected U.S. economic data on Wednesday,
including a weak services report and ADP employment report, depicting a
slowing economy, after a rise in initial applications for unemployment
benefits last week.

"The data is feeding expectations that maybe the labour market is weakening
and the Fed will be able to cut rates later in the year," said Jane Foley,
head of FX strategy at Rabobank.

Markets now see nearly 50 basis points of Federal Reserve interest rate cuts
in 2024, most likely starting with a 25-basis-point move in September and a
second by year-end, bets which also brought down U.S. Treasury yields.

The most important monthly U.S. labour market data, non-farm payrolls, due
on Friday, are expected to show an increase of 190,000 jobs in June after a
rise of 272,000 in May, a Reuters poll of economists showed.

U.S. markets are closed on Thursday for the July 4 holiday.

British voters began to go to the polls on Thursday and look set to elect
Labour Party leader Keir Starmer as the next prime minister, sweeping Rishi
Sunak's Conservatives out of office after 14 often turbulent years.

Foley attributed two main reasons for the limited market reaction to the
calling of elections and campaigning drama.

"Firstly, Labour has been consistently above (the Conservatives) in opinion
polls for some time, so there has been no shock," she said.

"The second reason is Keir Starmer and Rachel Reeves have done quite a good
job at convincing investors and the electorate that they have moved the
party into the centre ground."

Reeves is the Labour Party's finance policy chief.

Analysts also pointed to more uncertainty about the French elections, with a
run-off set for Sunday.

Market nerves have eased somewhat and the closely watched gap between German
and French 10-year yields has narrowed to less than 70 basis points having
been above 80 bps ahead of the first round of voting last week.

Francesco Pesole, FX strategist at ING, said this was due to numerous centre
and left-wing candidates dropping out of three-way runoffs to curb prospects
for Marine Le Pen's right-wing National Rally party.

"This raises the chances of a hung parliament, which appears a more
desirable outcome for markets as it limits the chances of aggressive
spending manoeuvres," he said.

However, he added, "Our rates team continues to call for structurally wider
French spreads and we expect that to weigh on the euro throughout the
summer."

YEN WATCH

The beleaguered Japanese yen, which failed to gain much traction on
Wednesday, strengthened, with the dollar down 0.33% at 161.18 yen.

The yen was, however, still not far from a trough of 161.96 per dollar hit
in the previous session, its lowest since December 1986, with fundamentals
stacked against it.

Traders were preparing for possible Japanese government currency
intervention with U.S. markets off for the July Fourth holiday.

Tokyo's previous two rounds of yen buying came at illiquid points in the
global trading day or holiday-thinned trading.

However, the hurdle for intervention may be higher at this stage, said
Marito Ueda, general manager of the market research department at SBI
Liquidity Market.

"The Ministry of Finance is saying the trigger for intervention is not the
level, but if there are excessive moves. It's hard to step in, since current
moves don't fall into that category."

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

Gold Gold price remains on track for second straight week of gains, awaits
US NFP

 

Gold price (XAU/USD) attracts fresh buyers following the previous day's
range-bound price action and climbs to the $2,365 area, or its highest level
since June 21 during the Asian session on Friday. The markets have been
pricing in a greater chance that the Federal Reserve (Fed) will cut in
interest rates in September and again in December in the wake of the recent
softer US macro data. This, in turn, drags the US Dollar (USD) lower for the
fourth straight day, to over a three-week low and turns out to be a key
factor lending support to the commodity. 

 

That said, the prevalent risk-on environment might keep a lid on any runaway
rally for the safe-haven Gold price. Traders might also refrain from placing
aggressive bets and prefer to wait for the release of the US monthly
employment details. The popularly known Nonfarm Payrolls (NFP) report will
influence market expectations about the Fed's future policy decisions. This,
in turn, will drive the near-term USD demand and provide a fresh directional
impetus to the precious metal, which remains on track to register gains for
the second successive week. 

 

 

Daily Digest Market Movers: Gold price is underpinned by Fed rate cut bets,
sustained USD selling

Expectations for an imminent start of the Federal Reserve's rate-cutting
cycle in September weigh on the US Dollar for the fourth straight day on
Friday and continue to lend support to the non-yielding Gold price. 

The market bets were lifted by this week's softer US macroeconomic releases,
which pointed to signs of weakness in the labor market and a loss of
momentum in the economy at the end of the second quarter.

That said, hawkish signals from a slew of influential Fed officials, along
with the minutes of the June FOMC policy meeting, suggest that policymakers
were still not confident about bringing down lending costs.

Furthermore, the underlying bullish sentiment across the global equity
markets holds back traders from placing fresh bullish bets around the
safe-haven precious metal ahead of the closely-watched US employment data.

The popularly known Nonfarm Payrolls report is due for release later during
the North American session and is expected to show that the US economy added
190K jobs in June as compared to the 272K previous.

Meanwhile, the unemployment rate is anticipated to hold steady at 4%, while
Average Hourly Earnings growth could see a modest dip, rising by the 3.9%
yearly rate as compared to the 4.1% increase recorded in May. 

The crucial data will play a key role in influencing market expectations
about the Fed's future policy decisions, which, in turn, will drive the USD
demand and provide a fresh directional impetus to the XAU/USD.

Technical Analysis: Gold price needs to find acceptance above $2,365 area
before the next leg up

>From a technical perspective, Wednesday's sustained breakout through the
50-day Simple Moving Average (SMA) was seen as a fresh trigger for bullish
traders. Adding to this, oscillators on the daily chart have again started
gaining positive traction and suggest that the path of least resistance for
the Gold price is to the upside. Some follow-through buying beyond the
$2,365 area will reaffirm the constructive outlook and allow the XAU/USD to
reclaim the $2,400 mark. The momentum could extend further towards
challenging the all-time peak, around the $2,450 zone touched in May.

 

On the flip side, weakness back towards the 50-day SMA resistance
breakpoint, around the $2,339-2,338 region, could be seen as a buying
opportunity. This is followed by support near the $2,319-2,318 area, which
if broken decisively could make the Gold price vulnerable to weaken further
below the $2,300 mark and test the $2,285 horizontal zone. Failure to defend
the said support levels might expose the 100-day SMA, currently near the
$2,258 area, and the $2,225-2,220 support before the XAU/USD eventually
drops to the $2,200 round-figure mark.

 


 

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 

 

 

 Invest Cellphone:            +263 71 944 1674 | +27 79 993 5557 

Email:               bulls at bullszimbabwe.com

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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
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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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