Bulls n Bears Daily Market Commentary : 17 July 2024

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Bulls n Bears Daily Market Commentary : 17 July 2024

 

 	



 

 	


ZSE commentary

 

 

ZSE remains buoyant on Econet, mid-tier gains

HARARE – Zimbabwe Stock Exchange shares continued to march in positive
territory on Wednesday supported by Econet and select mid-tier gains. 

 

The All Share Index advanced 2.74% to 194.40 with a year to date gain of
94.40%. Market bias was positive after 17 stocks recorded gains against five
losers.

A total of 4.98 million shares traded with turnover at ZWG10.62 million.
Star Africa contributed the most to volume at 1.87 million shares and Delta
brought in the most value at ZWG5.57 million. Total trades amounted to 302
with Delta and Econet the most active.

There was no foreign participation. In its first quarter economic bulletin,
the Ministry of Finance continued to note an absence of foreign portfolio
investments (over the last seven years) as it recorded a net lending
position in the period (Q1). This indicates that more funds were flowing out
of the country than flowing in, due to both debt and non-debt creating
flows.

 

The Top Ten Index put on 2.36% to 205.94. Econet was the top heavyweight
performer, gaining 14.79% to 395.76c and Ecocash added 5.74% to 45.99c.

CBZ dropped 4.29% to 1 450c. In a further cautionary statement, the group
said it has engaged ZSE for a further extension of the time within which it
should make the mandatory offer to the remaining shareholders of First
Mutual. As per the ZSE requirements, CBZ cannot proceed with the offer until
it has secured approval from the Competition and Tariff Commission. A
fractional loss was seen in Delta ahead of the release of its trading update
next week.

The Medium Cap Index was the strongest link after rising 3.76%to 157.33.
Three stocks hit limit up; Masimba, Dairibord and BAT Zimbabwe. Masimba,
which will soon announce changes at shareholder level, closed at 178.25c.
Dairibord ended at 201.25c and BAT at 5 951.05c.

TSL rose 14.98% to 301.6c and Unifreight, whose major shareholder recently
restructured his portfolio, put on 14.93% to 66.2c.

There were marginal losses in Willdale and Star Africa.

The Small Cap Index shed 0.73% to 100.11 following Bridgefort's 53.11% fall
to 1.51c. The market continues to await new information about the company's
transaction with Diaspora Kapita, which will culminate in its migration to
the Victoria Falls Stock Exchange.

On the VFEX, turnover was subdued at US$18 730 following the trade of 88 275
shares. Axia led the risers with a 19.84% gain to 9 US cents and Padenga put
on 8.58% to 15.31 US cents. First Capital added 5.62% to 3.57 US cents
taking its market cap to US$77.14 million. Zimplow advanced 3.09% to 2 US
cents and a fractional gain was recorded in Innscor.

There were small losses in Seed Co International and Simbisa.

Meanwhile, Caledonia Mining has strongly affirmed its focus on gold in
optimising the net present value of its Blanket mine in Gwanda. The company
is also open to considering every legal funding option for its Bilboes gold
project, 75 km north of Bulawayo.

In highlighting the historical timeline of the miner’s operations in
Zimbabwe, Caledonia Mining CEO Mark Learmonth highlighted during the Junior
Indaba – held in Johannesburg recently – that there had been a concerted
effort to make the company more agile and efficient by focusing only on its
gold assets.

He asserted that it is now more “straightforward” to mine gold in Zimbabwe,
highlighting the ease of being able to sell 75% of what gold offshore,
particularly through Dubai, in the United Arab Emirates, and receive payment
in US dollars, while the remaining 25% is sold in Zimbabwe, for which
payment is received in local currency. The company also affirmed it’s paying
out quarterly dividends as a way of demonstrating the sound economic
feasibility of its mining endeavours.

He stressed that it’s most fertile equity market is in Zimbabwe, where it
has raised more money than anywhere else in the world – more than in New
York and London. The Zimbabwe market is entirely focused on the dividend.
“You have to cut your cloth according to the recipient that you are talking
to. The Zimbabweans love the dividend and paying the dividend sends a
powerful message to investors. It is also a very powerful message to the
Zimbabwean government, and it is something that is front of mind right
now.”-finx

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity 

 

South Africa

 

South African rand slips before retail sales data

(Reuters) – The South African rand slipped against the dollar in early trade
on Wednesday before the release of retail sales figures.

 

At 0625 GMT, the rand traded at 18.0725 against the dollar, about 0.2%
weaker than its previous close.

 

Statistics South Africa will publish May retail sales data at 1100 GMT,
shedding light on consumer spending patterns in one of Africa’s biggest
economies.

 

Economists polled by Reuters predict retail sales will rise 0.7% year on
year in May, after a 0.6% increase in April.

 

>From 1200 GMT, mining and petroleum minister Gwede Mantashe will brief
reporters on his plans for those sectors.

 

On Thursday investor attention will shift to an interest rate announcement
by South Africa’s central bank and a speech in parliament by President Cyril
Ramaphosa laying out priorities for the new coalition government.

 

 

Nigeria

 

Nigeria’s forex inflows surge 57% as naira shows stability

Foreign exchange (FX) inflows into the Nigerian economy jumped by 57 percent
in one year, resulting in the Naira showing some signs of stability.

 

Analysts attribute the rising forex inflows into the Nigerian economy to the
consistent policies of the Central Bank of Nigeria (CBN) which have spurred
investor confidence and instilled market stability into Africa’s most
populous nation.

 

Data from the CBN seen by BusinessDay showed that Nigeria recorded $8.86
billion in FX inflows in February 2024, higher than $5.66 billion in the
corresponding period of February 2023, representing a 57 percent jump over
the period.

 

Similarly, foreign exchange turnover increased by 180 percent year-on-year
to $240.64 million in February 2024, compared to $85.80 million recorded in
February 2023, the CBN’s economic report said.

 

Inflows through the CBN rose by 29 percent to $3.26 billion in February 2024
as against $2.53 billion in the corresponding period of February 2023.

 

On a month-on-month basis, aggregate inflows into the Nigerian economy
increased by 80 percent to $8.86 billion, compared with $4.91 billion
reported in the preceding month, according to a monthly economic report of
the apex bank.

 

Inflows through the central bank rose by 128 percent to $3.26 billion, from
$1.43 billion in the preceding month. Also, autonomous inflows rose by 61
percent to $5.60 billion, from $3.48 billion.

 

 

“The upsurge in the FX inflows reflects the positive impacts of the increase
in the prevailing interest rate and the relative stability of the exchange
rate,” Ayokunle Olubunmi, head of financial institutions ratings at Agusto
Consulting, said.

 

He said given the relatively low interest rates in the developed countries,
investors are attracted by the high interest rates in developing countries,
noting that the countries that could provide some assurance about the
remittance of funds will also be the toast of these portfolio investors.

 

Olubunmi said the CBN has also continuously engaged the foreign investors.
This has provided an avenue to address their concerns and provide
information about the activities of the monetary authority.

 

The naira has been relatively stable, hovering around N1, 500 per dollar at
the official market compared to the most volatile period on February 20,
2024 when it was over N1,800/$ and headed for N2,000/$, according to data
compiled from the FMDQ Securities Exchange Limited.

 

On May 30, the exchange rate stood at N1,484/$ at the official NAFEM market
and N1,460/$ at the parallel market. On June 30, it stood at N1,503 at the
official market and N1,520/$ at the parallel market. It is not all uhuru,
but there have been less surprises and volatility of the local currency
recently.

 

Charlie Robertson, head of macro strategy, FIM Partners UK Ltd, said,
“International investors who know Nigeria, recognise that the currency is
very undervalued, and that high interest rates are attractive.”

 

He noted that a few billions have flowed into Nigeria – but this is small
compared to the $20 billion plus that has flowed into Egypt. This is partly
because interest rates are still lower in Nigeria than inflation rate –
while they are nearly the same in Egypt.

 

Foreign investments into the country rose to $3.38 billion in the first
quarter (Q1) of 2024, from $1.09 billion reported in the previous quarter,
according to the latest capital importation report by the National Bureau of
Statistics (NBS).

 

Razia Khan, managing director and chief economist, Africa and Middle East
Global Research, Standard Chartered Bank, said: “What matters for confidence
is what is happening in Nigeria right now – not so much the history of past
inflows, but that there was an Open Market Operation (OMO) auction this week
with minimal investor interest, and the NGN is under pressure now.”

 

 

According to the CBN report, new investments into the economy increased
significantly to $1.24 billion, compared with $0.33 billion in January 2024.

 

Olayemi Cardoso, CBN governor, said last week that investor confidence is
back in Nigeria on the back of the ape bank’s clearance of foreign exchange
backlog.

 

On March 20, 2023, the CBN governor announced the clearance of a $7 billion
foreign exchange backlog as part of the bank’s overall strategy to stabilise
the exchange rate and curb imported inflation, spurring confidence in the
banking system and the economy.

 

The CBN has, since Cardoso became the governor, raised the Monetary Policy
Rate (MPR) by 750 basis points to 26.25 percent in May 2024 from 18.75
percent in July 2023.

 

Nigeria’s inflation rate accelerated to 34.19 percent in June 2024,
representing a 0.24 percent increase compared to 33.95 percent in May 2024,
as reported by Nigeria’s data agency.

 

Alatise Yusuf, chief investment officer, Cowry Asset Management, said: “I
think the 57 percent increase in FX inflows into the Nigerian economy, from
$5.66 billion in February 2023 to $8.86 billion in February 2024, as
reported by the CBN, is attributable to several factors. Improved oil
production and higher global oil prices have significantly boosted FX
earnings. Government and Central Bank of Nigeria (CBN) policies aimed at
attracting foreign investment such as several FX policy reforms and
incentives, as well as strategic management of the exchange rate to attract
foreign investors, have played a role.

 

“In addition, the increased FDI and portfolio investments seen so far have
resulted from a more stable and attractive investment climate. Higher levels
of diaspora remittances, possibly due to better official remittance channels
and incentives, have further increased FX inflows. With these, we can say
efforts to diversify the economy and boost non-oil exports have started
yielding results.”

 

On the confidence level, we think this increase in FX inflows has likely
improved investor confidence. The normal convention has it that positive
trends in FX inflows signal a more robust and stable economy, encouraging
investment. Consistent and transparent economic policies enhance investor
trust in market stability. Higher FX inflows generally increase the supply
of foreign currency, helping to stabilise the naira by easing the pressure,
and leading to a more favourable exchange rate.

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

 

Yen rally shakes markets, sending dollar to weakest level since May

The dollar has tumbled to its weakest level in almost two months, a move
amplified by a sharp rally in the yen that reverberated across global
currency markets.

 

The Bloomberg Dollar Spot Index kept ticking lower Thursday after slumping
as much as 0.4% on Wednesday to its lowest level since late May. The
Japanese currency broke through ¥156 to the greenback in Tokyo trading on
Thursday morning, amid ongoing speculation authorities could intervene again
to prop it up.

 

The yen has surged about 4% since July 11, when Japan is thought to have
waded into the market with a surprise bout of buying. The currency was
boosted the following day by another suspected intervention, and more
recently by a prominent Japanese minister calling on the central bank to
increase interest rates to boost the value of the currency, and former U.S.
President Donald Trump flagging the exchange rate’s weakness.

 

The move in dollar-yen seems to be "sending shock waves” across other dollar
crosses, said Valentin Marinov, head of G-10 FX strategy at Credit Agricole.

 

Taro Kono, who has long said that he aims to eventually become Japan’s prime
minister, highlighted on Bloomberg Television this week the problems
generated by the yen’s sharp decline against the dollar, including the
inflationary effect on domestic prices. Kono said that while a cheaper yen
can help boost exports, the benefit to the country was now limited because
many Japanese companies have production facilities overseas.

 

Meanwhile, in an interview with Bloomberg Businessweek, Trump said that the
strength of the dollar has been hurting the competitiveness of U.S. exports
while also pointing to the weakness of yen and yuan, raising concerns he may
move to weaken the greenback if he were to win elections this year.

 

"We have a big currency problem,” he said. "I would always notice they
fought very hard to keep their currency low.”

 

Others have pointed to profit taking ahead of policy decisions from the Bank
of Japan and the Federal Reserve later this month. The dollar has weakened
since reaching a seven-month high at the end of June as traders piled into
bets its recent run was overdone.

 

"Some hot-money flows seem to be squaring some of their favorite G-10 bets
of the past two months ahead of the central bank meetings,” said Roberto
Cobo Garcia, head of G10 FX strategy at Banco Bilbao Vizcaya Argentaria SA
in Madrid.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold 

 

Gold price Gold hits another high record

 

Gold hit another record as traders placed stronger bets on Federal Reserve
rate cuts this year and weighed an uncertain outlook for US politics.

 

Bullion advanced in Asia hours to touch an all-time high of US$2 475.81 an
ounce on Tuesday, following a 1,9 percent jump in the previous session.
Gold has rallied this month as traders pile into bets for earlier, deeper
rate cuts from the Fed amid increasing signs that inflation is cooling
toward the central bank’s target.  Lower borrowing costs tend to benefit the
metal as it yields no interest.

 

Gold soared nearly 20 percent this year, supported by large purchases from
central banks, strong consumer appetite in China and demand for haven assets
amid geopolitical tensions.

 

Momentum-focused players are starting to re-emerge as a key driver of gold
amid a more bullish environment. 

 

After stronger-than-expected US retail sales triggered a brief selloff on
Tuesday, traders added to long positions in the precious metal, which helped
to drive a rebound and drawing even more flows, according to Chris Weston,
head of research at Pepperstone Group.

 

“The fundamentals have clearly shifted to offer investors increased reasons
to re-weight gold holdings in the portfolio, and this has led to
price-sensitive funds chasing the upside,” Weston wrote in a Wednesday note.


 

“With broad-based positioning and sentiment not near extremes, US$2 500
could well be tested soon enough.”Still, there are signs that the rally is
overextended at these levels. 

 

Gold’s 14-day relative-strength index was hovering near 70, a threshold that
some investors consider as overbought.Elsewhere, markets continued to assess
the financial and political implications of the weekend assassination
attempt on Donald Trump as his bid for the presidency gains momentum. –
Bloomberg

 

 

 


 

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
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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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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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