Bulls n Bears Daily Market Commentary : 13 June 2024

Fri Jun 14 08:45:48 CAT 2024

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Bulls n Bears Daily Market Commentary : 13 June 2024

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

Heavy and mid-cap counters lift the market...

Gains  in  heavy  and  midcap  counters  lifted  the  market  in Thursday's session. The primary All Share Index rose 3.30% to 110.03pts while, the Blue-Chip Index firmed up 4.28%  to 113.74pts. The Agriculture  Index went up 0.23% to close at 96.15pts as the Mid Cap Index added 2.07% to 109.16pts. Hotelier Meikles led the top performers of the day on a 14.99% jump to $4.7065 while, RTG surged 13.64% to close at $0.2500. Fintech group Ecocash Holdings grew 9.01% to $0.1800 while, retailer OK Zimbabwe  charged 8.17% to settle at $0.4987. Proplastics capped the top five winners of the day on a 7.09% uplift to end pegged at $0.4300. Star Africa was the sole faller of the day as it tumbled 2.31% to settle at $0.0082. The market closed with a positive breadth of fourteen after fifteen counters recorded gains against one that faltered.

Activity aggregates were mixed in the session as volumes traded plunged 91.30% to 2.78m shares while, turnover grew 4.26% to $7.75m. The top volume drivers of the day were Econet (59.48%), Delta (18.42%) and Star Africa (8.76%). Delta contributed 59.57% to the total value traded while, Econet accounted for 35.67% of the same. Morgan & Co Multi Sector ETF added 10.53% to close at $0.4200 while, OMTT ETF climbed up 3.42% to end the day pegged at $0 .1086. A total of 61,820 units exchanged hands in the session.

VFEX reverses prior session gains...

The VFEX market reversed prior session's gains as the All-Share Index declined 0.45% to 99.45pts. Axia led the laggards of the day on a 1.01% retreat to $0.0978, followed by lnnscor that eased 0.92% to $0.4512. Padenga declined 0.31% to $0.1595. Partially mitigating today's losses was banking group First Capital that ticked up 10.00% to $0.0330. Fast foods group Simbisa edged up 0.11% to end the day pegged at $0.3500.

Activity aggregates faltered in the session as volumes traded 37,726  53.07 dropped  53.07% to  37,726  shares  while,  turnover  slipped 47.62% to $14,399.74. lnnscor and Simbisa anchored today's aggregates after contributing a shared 86.53% to the total volumes traded and 98.21% to the total value traded.

efesecurities

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets 

South Africa

South African rand edges lowers as unity government talks continue

(Reuters) - The South African rand edged lower on Thursday as talks to try to form a government of national unity continued.

At 1535 GMT, the rand traded at 18.4150 against the dollar , 0.14% weaker than its previous close.

On Wednesday, South Africa's Inkatha Freedom Party (IFP) said it would be willing to join a unity government with the African National Congress (ANC) and the Democratic Alliance (DA) after no party managed to secure a parliamentary majority in last month's elections.

Neither the ANC nor the DA have confirmed any such arrangement. Markets favour a government that includes the pro-business DA.

South African Rand coins are seen in this illustration picture

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration/File Photo Purchase Licensing Rights, opens new tab

"Investors are waiting for any signs of a formal agreement between the various political parties forming a government of national unity," Rand Merchant Bank analysts said in a research note.

The ANC and DA's senior leadership will both meet on Thursday. Parties are in a race against time to secure a deal before the newly elected parliament sits on Friday.

On the stock market, the Top-40 (.JTOPI), opens new tab index closed 1% lower.

South Africa's benchmark 2030 government bond was stronger, with the yield down 2 basis points to 10.105%.

Ghana

Cedi sells at GHS15.30 to $1, GHS14.28 on BoG interbank

The Ghanaian cedi has depreciated against the US dollar on the buying rate by 2 pesewas but maintained its value on the selling rate.

The buying rate as of 10:00am on Thursday, June 13, 2024, is GHS14.64, while the selling rate is also being offered at GHS15.30.

This is based on data provided by Cedirates.com, a well-known Ghanaian website for currency and fuel updates.

The Cedi is trading at GHS14.26 on purchasing rate and GHS14.28 selling price at interbank rates against the US dollar.

In comparison to the rates on Wednesday, the British Pound Sterling has increased in value on the buying rate by 7 pesewas and by 8 pesewas on the selling rate against the Cedi.

The buying and selling rates of the British Pound Sterling are, on average, GHS18.58 and GHS19.57, respectively.

The Euro has increased in value on the buying rate by 9 pesewas and by 8 pesewas on the selling rate against the cedi.

The purchasing and selling rates for the euro are GHS15.68 and GHS16.53, respectively.

The selling price of the pound sterling on the Bank of Ghana interbank market is GHS18.33, 20 pesewas rise from the previous rate.

The euro is currently selling at GHS15.48 on the interbank market, 18 pesewas rise from the previous rate.

Through LemFi and Afriex, people can send money to Ghana from the US or the UK at GHS14.60 and GHS14.70 respectively, for each dollar.

The two money transfer sites are offering buying and selling rates of GHS18.63 and GHS19.05 for the British Pound, respectively.

The only one of the two that updated euro rates on Wednesday, Afriex, is selling GHS15.83 for €1.

For those who will be renewing their Netflix, Spotify or Apple Music subscriptions through Visa and Mastercard, both payment processors are offering a US dollar for GHS16.10 each.

 <mailto:info at bulls.co.zw> 

Global Markets

Dollar Dominance in the International Reserve System: An Update

Dollar dominance—the outsized role of the US dollar in the world economy—has been brought into focus recently as the robustness of the US economy, tighter monetary policy and heightened geopolitical risk have contributed to a higher greenback valuation. At the same time, economic fragmentation and the potential reorganization of global economic and financial activity into separate, nonoverlapping blocs could encourage some countries to use and hold other international and reserve currencies.

Recent data from the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) point to an ongoing gradual decline in the dollar’s share of allocated foreign reserves of central banks and governments. Strikingly, the reduced role of the US dollar over the last two decades has not been matched by increases in the shares of the other “big four” currencies—the euro, yen, and pound. Rather, it has been accompanied by a rise in the share of what we have called nontraditional reserve currencies, including the Australian dollar, Canadian dollar, Chinese renminbi, South Korean won, Singaporean dollar, and the Nordic currencies. The most recent data extend this trend, which we had pointed out in an earlier IMF paper and blog.

These nontraditional reserve currencies are attractive to reserve managers because they provide diversification and relatively attractive yields, and because they have become increasingly easy to buy, sell and hold with the development of new digital financial technologies (such as automatic market-making and automated liquidity management systems).

This recent trend is all the more striking given the dollar’s strength, which indicates that private investors have moved into dollar-denominated assets. Or so it would appear from the change in relative prices. At the same time, this observation is a reminder that exchange rate fluctuations can have an independent impact on the currency composition of central bank reserve portfolios. Changes in the relative values of different government securities, reflecting movements in interest rates, can similarly have an impact, although this effect will tend to be smaller, insofar as major currency bond yields generally move together. In any event, these valuation effects only reinforce the overall trend. Taking a longer view, over the last two decades, the fact that the value of the US dollar has been broadly unchanged, while the US dollar’s share of global reserves has declined, indicates that central banks have indeed been shifting gradually away from the dollar.

At the same time, statistical tests do not indicate an accelerating decline in the dollar’s reserve share, contrary to claims that US financial sanctions have accelerated movement away from the greenback. To be sure, it is possible, as some have argued, that the same countries that are seeking to move away from holding dollars for geopolitical reasons do not report information on the composition of their reserve portfolios to COFER. Note, however, that the 149 reporting economies make up as much as 93 percent of global FX reserves. In other words, non-reporters are only a very small share of global reserves.

One nontraditional reserve currency gaining market share is the Chinese renminbi, whose gains match a quarter of the decline in the dollar’s share. The Chinese government has been advancing policies on multiple fronts to promote renminbi internationalization, including the development of a cross-border payment system, the extension of swap lines, and piloting a central bank digital currency. It is thus interesting to note that renminbi internationalization, at least as measured by the currency’s reserve share, shows signs of stalling out. The most recent data do not show a further increase in the renminbi’s currency share: some observers may suspect that depreciation of the renminbi exchange rate in recent quarters has disguised increases in renminbi reserve holdings. However, even adjusting for exchange rate changes confirms that the renminbi share of reserves has declined since 2022.

Some have suggested that what we have characterized as an ongoing decline in dollar holdings and rise in the reserve share of nontraditional currencies in fact reflects the behavior of a handful of large reserve holders. Russia has geopolitical reasons to be cautious about holding dollars, while Switzerland, which accumulated reserves over the last decade, has reason to hold a large fraction of its reserves in euros, the Euro Area being its geographical neighbor and most important trading partner. But when we exclude Russia and Switzerland from the COFER aggregate, using data published by their central banks from 2007 to 2021, we find little change in the overall trend.

In fact, this movement is quite broad. In our 2022 paper, we identified 46 “active diversifiers,” defined as countries with a share of foreign exchange reserves in nontraditional currencies of at least 5 percent at the end of 2020. These include major advanced economies and emerging markets, including most of the Group of Twenty (G20) economies. By 2023, at least three more countries (Israel, Netherlands, Seychelles) have joined this list.

chart showing the declining percentage of global FX reserves held in US dollars

We also found that financial sanctions, when imposed in the past, induced central banks to shift their reserve portfolios modestly away from currencies, which are at risk of being frozen and redeployed, in favor of gold, which can be warehoused in the country and thus is free of sanctions risk. That work also showed that the demand for gold by central banks responded positively to global economic policy uncertainty and global geopolitical risk. These factors may lie behind the further accumulation of gold by a number of emerging market central banks. Before making too much of this trend, however, it is important to recall that gold as a share of reserves still remains historically low.

chart showing gold holdings in official reserve assets

In sum, the international monetary and reserve system continues to evolve. The patterns we highlighted earlier—very gradual movement away from dollar dominance, and a rising role for the nontraditional currencies of small, open, well-managed economies, enabled by new digital trading technologies—remain intact.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices muted as dollar rebounds on prospect of fewer rate cuts

Investing.com-- Gold prices moved little in Asian trade on Friday, pressured by a rebound in the dollar as  the prospect of fewer U.S. interest rate cuts largely offset optimism over some cooling in inflation. 

While the yellow metal marked some gains for the week, it was nursing a sharp tumble from record highs in the face of high interest rates. 

Spot gold rose 0.1% to $2,305.23 an ounce, while gold futures expiring in August rose 0.1% to $2,320.15 an ounce by 00:56 ET (04:56 GMT). 

Gold pressured by outlook of high rates 

Gold and broader metal prices retreated in recent sessions after the Federal Reserve said it expected to cut interest rates only once in 2024, compared to earlier forecasts for three cuts. 

While the yellow metal marked some gains after softer-than-expected consumer price index data weighed on the dollar, traders eventually pivoted back into the dollar following the Fed’s forecast.

Softer-than-expected producer price index data did little to deter the dollar's rebound, while Treasury yields also recovered from lows hit earlier this week. 

Higher-for-longer rates bode poorly for gold and other metals, given that they increase the opportunity cost of investing in non-yielding assets. 

This notion kept other precious metals trading in a tight range on Friday. Platinum futures rose 0.3% to $957.80 an ounce, while silver futures fell 0.2% to $28.992 an ounce. Both metals were also set for muted weekly performances. 

Copper prices head for muted week as China sentiment sours 

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Among industrial metals, copper prices rose marginally on Friday but were set for a middling performance this week amid pressure from a stronger dollar.

Benchmark copper futures on the London Metal Exchange rose 0.3% to $9,824.0 a tonne, while one-month copper futures rose 0.2% to $4.4945 a pound. 

Sentiment towards China soured after the European Union joined the U.S. in imposing tariffs on the import of Chinese electric vehicles. Not only do the tariffs present headwinds for the fast-growing industry, they also present some headwinds for copper demand, given that EVs are a major consumer of the red metal.

Additionally, increased trade ructions between the world’s biggest economies spurred concerns over a renewed trade war.

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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