Bulls n Bears Daily Market Commentary : 10 June 2024

Tue Jun 11 07:08:06 CAT 2024

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Bulls n Bears Daily Market Commentary : 10 June 2024

 <mailto:sales at dulys.co.zw?subject=Request%20Quote> ZSE commentary

Heavies weigh on the market in Monday's trades...

The market continued to falter in Monday's trades mainly weighed down by heavy cap counters. The All-Share Index shed 0.27% to 105.82pts while, the Blue- Chip Index was 0.53% lower at 108.37pts. The Agriculture Index trimmed 0.10% to end the day pegged at 95 .09pts while, Mid-Cap Index added 1.09% to close at 106.42pts. Pipe manufacturer Proplastics led the laggards of the day as it eased 9.75% to end at $0.3375 as a circa of 462,600 shares exchanged hands in the name. The duo of Econet and Ecocash lost 5.37% and 1.86% to see the former close at $1.7141 and the latter at $0.1963. Seed technology group SeedCo Limited ticked down 1.41% to end at

$1.7000 while, retailer OK Zimbabwe capped the top five worst performers of the day on a 0.59% loss to $0.4473. Partially offsetting today's losses was Unifreight that edged up 11.54% to $0.2900 while, Meikles rose 8.40% to $4.1322 as demand continued to increase in the counter. Property concern First Mutual inched up 8.11% to close at $0.4000 while, insurer Fidelity was 4.65% higher at $0 .9000. Agriculture concern Ariston added 2 .31% to settle at $0.0399.

Activity aggregates improved in the session as volume traded rose 71.04% to 1.57m shares while, turnover increased  by 13.48% to $2.48m. Proplastics, Econet, Star Africa and Delta drove the volume aggregates of the day as they contr ibuted 29.48%, 26.90%, 17.78% and 11.48% respectively. The duo of Delta and Econet anchored the turnover of the day as they claimed a combined 89.45% of the total. In the ETF category, the Old Mutual Top 10 ETF was 1.72% up at $0.1057 as 39,100 shares traded. The Tigere REIT was 0.02% lower at $0.6600 as 380,845 units exchanged hands during the session - efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets 

South Africa

South African rand firms as unity government talks continue

(Reuters) - The South African rand strengthened on Monday, as focus remained on talks between political parties on forming a government of national unity in the country.

The African National Congress (ANC) last week issued a broad invitation to other parties to be part of a new government, after it lost its majority in last month's election for the first time since the end of apartheid.

The ANC has not ruled out working with any party and its potential partners diverge widely, from the pro-business Democratic Alliance to the leftist Economic Freedom Fighters.

South Africa's National Assembly will hold its first sitting on Friday, when new lawmakers will be sworn-in, and the speaker, deputy speaker and next president will be elected.

At 1520 GMT, the rand traded at 18.7250 against the U.S. dollar , 0.93% stronger than its previous close on Friday.

Oxford Economics Africa said in a research note that the negotiations between political parties would remain front and centre this week and the rand would be skittish until there was more certainty.

-

On the Johannesburg Stock Exchange, the Top-40 index (.JTOPI), opens new tab closed about 0.9% lower. South Africa's benchmark 2030 government bond was firmer, with the yield down 16.5 basis points to 10.375%.

Ghana

Cedi to end 2024 at GH¢15.91 to a dollar – Report

Research firm, IC Securities has revised its end-2024 US dollar to Ghana cedi rate to GH¢15.91/US$, from its initial forecast of GH¢13.2/US$.

This, it said, is based on the current macroeconomic environment.

“Following the unexpected cut in the policy rate [by the Bank of Ghana] in January 2024, we indicated our deferred inclination to raise our forecast for the US dollar Ghana cedi FX [foreign exchange] rate as we foresaw strong selling pressure on the local currency. Our decision to delay the revision to our forecast until mid-year was anchored on expected programme-related inflows and the final tranche of the cocoa syndicated loan for the 23/24 season.”

“However, these inflows did not fully materialise while GHS [Ghana cedi] supply overwhelmed the market. The subsequent adjustment to banks' CRR [Cash Reserve Requirement] exerted a limited squeeze on local currency liquidity as banks mostly converted their maturing BoG securities into the CRR positions. Additionally, the seeming fiscal expansion via the clearance of contractor arrears continued to propagate GHS [cedi] liquidity in the forex market with a resultant pressure on the local currency”, IC Securities explained.

It added that the expected inflow of approximately $2.3 billion in the remainder of 2024 appears largely attainable as the indicative timelines add some credibility to its expectations.

It continued that the cedi would benefit more from the signalling effect of the World Bank inflows and less from actual foreign exchange sales as the Bank of Ghana continues to implement constrained interventions amidst reserve build-up.

“While these inflows could trigger a short-term retracement, we foresee continued hedging by domestic investors as we approach the December elections, which will potentially offset any inflows-induced appreciation. Consequently, we raise our forecast for the end-2024 US$/GHS rate to GH¢15.91/US$.

Presently, the local currency is going for about GH¢15.00 to the dollar at the forex bureaus.

 <mailto:info at bulls.co.zw> 

Global Global Markets

U.S. Actions Threaten Dollar’s Dominance as Global Reserve Currency

THE United States is persistently undermining the pillars supporting the dollar’s status as the world’s reserve currency. Recent developments, including powerful Americans questioning the rule of law following Donald Trump’s conviction, have exacerbated the situation. These actions are effectively challenging the global community to seek alternatives, yet the dollar remains unchallenged for now, according to a report by Reuters.

The fallout from Trump’s conviction adds to a series of aggressive moves by the U.S. that signal a readiness to confront the world. The country has dramatically increased its use of sanctions as a foreign policy tool and accumulated immense debt, relying on foreign investors to finance its excesses.

In conversations with financial executives, global investors, and experts in Asia and the U.S. over the past three weeks, a recurring theme emerged: growing concern over American overreach. Several sources, speaking anonymously, expressed doubts about how long the U.S. can continue without significant repercussions.

Despite these concerns, no credible alternative to the dollar has emerged. In Asia, there is increasing urgency to find an ‘America plus 1′ strategy to reduce U.S. exposure and boost non-dollar trade flows. However, efforts to build such systems are progressing slowly, if at all. Rising authoritarianism, threats to individual and property rights, and geopolitical tensions make other options even less attractive.

A recent survey indicates that central bank reserve managers plan to increase their dollar holdings over the next 12-24 months, drawn by the currency’s liquidity and the ongoing geopolitical tensions.

“Paradoxically, the U.S. dollar’s strength partly stems from its near-unchallenged safe-haven status,” said Steve H. Hanke, a professor of applied economics at Johns Hopkins University and former adviser to President Ronald Reagan. “However, most investors fail to grasp the geopolitical risks lurking beneath the surface until it’s too late.”

The dollar’s dominance is rooted in the United States’ democratic principles, the size of its economy, the depth of its markets, and the strength of its institutions and rule of law. However, recent events are testing these foundations. Attacks on the U.S. legal system, especially following the Trump verdict, are shaking confidence in these institutions.

Florida Governor Ron DeSantis, for example, called the court a “kangaroo court” on social media, asserting that “the verdict represents the culmination of a legal process bent to the political will of the actors involved.”

An Asian investor highlighted potential threats to U.S. institutions, particularly any undermining of the Federal Reserve’s authority. Such developments could lead to a significant depreciation of the dollar, he warned.

A senior New York-based financial executive, traveling in Asia, reported clients’ growing concerns about U.S. and Western financial policies. The ever-expanding array of sanctions is a primary worry, with the possible seizure of $300 billion in sovereign Russian assets over Ukraine being particularly contentious. “The West crossed a Rubicon there,” the executive noted.

An October 2021 Treasury Department review revealed that sanctions had surged from 912 in 2000 to 9,421 by that year, with both American adversaries and some allies reducing their dollar use in response.

An Asia-based investor is closely watching ByteDance’s challenge of a U.S. ban on TikTok, viewing it as a test of the U.S. legal system’s integrity. Should the U.S. government fail to substantiate claims that the app poses a national security threat, it would cast doubt on the independence of the legal system. Nevertheless, the investor conceded that the U.S. legal system remains more independent and reliable than many others.

As the U.S. continues to take actions that undermine confidence in its institutions and financial policies, the world remains in search of alternatives to the dollar. Despite the challenges, the dollar’s position as the global reserve currency remains unchallenged for now. However, the growing consternation at home and abroad suggests that this dominance cannot be taken for granted indefinitely.

.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Gold gets harder to find

The gold mining industry is struggling to sustain production growth as deposits of the yellow metal become harder to find, according to the World Gold Council (WGC).

“We’ve seen record first quarter mine production in 2024 up 4 percent year on year. But the bigger picture, I think about mine production is that, effectively, it plateaued around 2016, 2018 and we’ve seen no growth since then,” WGC chief market strategist John Reade said.

According to data from the international trade association, mine production inched up only 0,5 percent in 2023 compared to a year ago.

In 2022, the growth was 1,35 per year on year, the year before it was 2,7 percent, while in 2020, global gold production logged the first decline in a decade, sliding 1 percent.

“I think the overwhelming story there is: after 10 years of rapid growth from around 2008, the mining industry is struggling to report sustained growth in production,” said Reade.

New gold deposits are becoming harder to find around the world as many prospective areas have already been explored, he elaborated.

Large-scale gold mining is capital-intensive, and requires significant exploration and development, taking an average of 10 to 20 years before a mine is ready for production, according to WGC.

Even during the exploration process, the likelihood of a discovery progressing into the development of a mine is low, with only about 10 percent of global gold discoveries containing sufficient metal to warrant mining.

Around 187 000 metric tons of gold has been mined to date, with the majority coming from China, South Africa and Australia. Gold reserves that can be excavated are estimated at around 57 000 tonnes, according to the United States Geological Survey. — CNBC Africa. 

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

Counters trading under cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

ZBFH

Invest Wisely!

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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 the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

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