Bulls n Bears Daily Market Commentary : 25 June 2024

Wed Jun 26 10:29:03 CAT 2024

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Bulls n Bears Daily Market Commentary : 25 June 2024

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

Gains persist on the bourse...

Gains on the ZSE persisted in Tuesday's session to see the primary All Share
Index rising by a further 2.59% to 120.86pts while, the Blue-Chip Index put
on 3.19% to 127.16pts. The Agriculture Index went up 0.56% to 103.16pts
while, the Mid Cap Index closed 0.42% higher at ll.69pts. Banking group ZB
Financial Holdings headlined the top performers of the day on a 14.74% jump
to $2.1800, followed by Proplastics that surged 14.29% to $0.7200. Logistics
company Unifreight edged up 13.72% to close at $0.3793 while, banking group
CBZ advanced 12.75% to settle at $5.7500. Star Africa capped the top five
winners of the day on a 9.52% uplift to end the day pegged at $0.0077.
Contrastingly, fintech group Ecocash Holdings led the laggards of the day on
a 10.87% slide to $0.1650 trailed by, Turnall Holdings that fell 7.52% to
close at $0.0300. Brick manufacturer Willdaleslipped 7.46% to $0.0370 while,
Ariston tumbled 2.50% to settle at $0.0390. Meikles capped the top five
fallers of the day on a 1.96% retreat to end the day pegged at $4.6002. The
market closed with a positive breadth of eight as thirteen counters recorded
gains against five that faltered.

Activity aggregates enhanced in the session as volumes traded ballooned
437.49% to 34.17m shares while, turnover  grew

10.12% to $6.20m. Ecocash highlighted the activity aggregates after a solo
contribution of 87.81% to the total volume traded and 79.80% to value
outturn. A total of 119,375 units worth

$13,964.37 exchanged hands in the ETF section. The OMTI ETF climbed 2.93% to
close at $0.1150. Tigere REIT charged 1.74% to $0.6315 after 6,886 units
exchanged hand in the session while, the Revitus REIT inched up 1.41% to end
the day pegged at $0.3352.

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity 

South Africa

South African Rand Slips As Coalition Government Takes Shape

The South African rand took a hit, trading at 18.31 against the dollar as of
June 26, 2024, just days before President Ramaphosa's cabinet announcement.

What does this mean?

Last month's election left the African National Congress (ANC) without a
parliamentary majority for the first time since apartheid ended. This led to
the formation of a coalition government with ten political parties,
including the ANC and the pro-business Democratic Alliance (DA). Investors
are jittery as they await the announcement of key cabinet positions,
especially in finance, trade, and small business development. A market
analyst at OANDA noted that appointments could significantly influence the
rand's performance. With the rand already 0.45% weaker than the previous
close, the anticipation surrounding the cabinet choices is palpable. Even
South Africa's benchmark 2030 government bond felt the tremors, with its
yield inching up by 2 basis points to 9.875%.

Why should I care?

For markets: Political reshuffles and market ripples.

The formation of a coalition government can either stabilize or shake up
financial markets, depending on key appointments. The DA's involvement is
generally seen as a positive by investors, given its pro-business stance. If
crucial portfolios like finance and trade go to DA members, the rand might
regain strength, offering investment opportunities at comparatively lower
risk

Nigeria

Naira sustains N1500/$ bandwidth at black market

The naira maintained the N1500 bandwidth against the dollar at the parallel
market, while the U.S. dollar index broke higher than 105 index points.

The local currency's upside has been tamed by Nigeria's high inflation
readings despite a hawkish CBN.

The local currency has lost more than two-thirds of its value since last
year.

NBS data showed Nigeria's core price growth, which does not include energy
or agricultural products, accelerated to 27% from 26.8% in May, while food
inflation climbed from 40.3% in April to 40.66% in May.

Nigeria's headline inflation rate is anticipated to persist due to ongoing
food supply shocks, high demand from the Eid-Mubarak festive period, and the
upcoming increase in the minimum wage.

The naira's rapid decline has also caused food import costs to rise.
Nigerian importers pay high tariffs on food products, yet the country's
economy is mostly dependent on imports.

Certain commodities prices have increased even more due to higher levies
brought on by the naira's depreciation.

Macros favour Nigeria's FX market

However, market fundamentals affirm that the naira is unlikely to fall to
its February low, at least not this month, partly because of the apex bank's
latest measures.

The CBN established a special account with $2.9 billion to support the
nation's unsteady foreign exchange market.

The disclosure came as a result of the FAAC Post Mortem Sub-Committee
members noticing that money from royalties and Production Sharing Contract
(PSC) taxes sales were moved to the Gazelle Funding account in the Nigerian
National Petroleum Company Limited (NNPCL) report from last month.

The transfer of an additional $925 million for Nigeria's oil-backed
prepayment facility into the Project Gazelle Funding account was announced
by the African Export-Import Bank (Afreximbank) on June 6.

Originally, the Nigerian National Petroleum Company Limited (NNPCL) provided
funding for this project.

The $2.25 billion World Bank loan that Nigeria received to stabilize the
economy and provide greater assistance to the poor and most vulnerable will
increase the availability of dollars and strengthen the weak naira.

The euro steadied after a politically motivated slip last week.

On Tuesday, traders bet on the U.S. retail sales report and comments from
Federal Reserve officials to help forecast when interest rate reductions
will occur.

The U.S. dollar index, which evaluates the strength of the greenback against
six significant competitors, rose to 105.46 recently, up 0.18%. On Monday,
it fell 0.2% from the six-week high of 105.4 set on Friday.

The greenback hit levels in the 105.8 range last seen in early May during
the recent week.

The reappearance of political unease in the European region and the
likelihood that the tighter-for-longer narrative surrounding the Federal
Reserve will continue to hold sway over the index helped it rise for the
second straight week.

MA

 <mailto:info at bulls.co.zw> 

Global Markets

Rupee Hits New Low As Dollar Demand Clamps Down

What's going on here?

The Indian rupee hit a new low, trading at 83.4875 to the US dollar on June
26, 2024, as persistent dollar demand and US interest rate concerns weigh it
down.

What does this mean?

Persistent dollar demand from public sector banks, driven mainly by the
monthly expiry of currency futures, contributed to the rupee's decline from
83.4325 in the previous session. High US interest rates and comments from a
top Federal Reserve official supporting more rate hikes if inflation doesn't
ease further exacerbated the situation. The RBI's daily fixing showed a
slight premium, hinting at sustained dollar demand. Traders are now closely
watching upcoming US PCE inflation data. The inclusion of Indian bonds in
the JPMorgan emerging market index on June 28 offers some hope, but
uncertainty remains about the size and timing of these inflows.

Why should I care?

For markets: Rupee's struggle reflects broader trends.

The rupee's fall reflects broader Asian currency declines, with peers
dipping between 0.1% to 0.4%, and the Chinese yuan trading below 7.29 to the
dollar. This regional trend is driven by fears of prolonged high US interest
rates, which make the dollar more attractive to investors. For market
watchers, this trend signals potential volatility and opportunities in forex
trading, especially as they await the PCE data that could further influence
sentiment.

The bigger picture: Global dynamics at play.

The rupee's decline isn't just about local factors; it's a snapshot of
global economic shifts. High US interest rates and Federal Reserve policies
are major global influencers, affecting currency markets worldwide. The
anticipation around the JPMorgan index inclusion reflects India's increasing
integration into global financial systems. However, these dynamics also
underline the vulnerabilities that come with global market dependencies,
especially for emerging economies.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold prices muted with US inflation data in focus

(Reuters) - Gold prices were subdued on Wednesday as investors waited for a
key U.S. inflation reading due this week, which could offer more clarity on
the timing of the Federal Reserve's first interest rate cut this year.

Spot gold eased 0.3% to $2,312.90 per ounce by 0720 GMT. U.S. gold futures
fell 0.3% to $2,324.80.

The dollar rose 0.2% against its rivals, making gold more expensive for
other currency holders, while benchmark 10-year yields also edged higher.
USD/US/

"Higher Treasury yields and a firmer U.S. dollar overnight on the back of
hawkish Fed comments have driven some weakness in gold prices this morning,
as the call for a quicker policy easing failed to find much validation from
policymakers," said IG market strategist Yeap Jun Rong.

Fed Governor Michelle Bowman on Tuesday reiterated her view that holding the
policy rate steady "for some time" will probably be enough to bring
inflation under control, but also repeated her willingness to raise
borrowing costs if needed.

Meanwhile, Fed Governor Lisa Cook said "at some point" it will be time to
cut interest rates.

The U.S. first-quarter gross domestic product estimates are due on Thursday,
and the personal consumption expenditures (PCE) price index report on
Friday.

"The risks come with any upside surprise in inflation, which could trigger
more uncertainty around Fed policies and may see further unwinding in the
yellow metal," IG's Jun Rong added.

Higher interest rates increase the opportunity cost of holding non-yielding
bullion.

"Dips in the gold price remain relatively shallow courtesy of buyers
stepping in from the sidelines on price retreats," Tim Waterer, chief market
analyst at KCM Trade, said in a note.

Waterer said the $2,368 level needed to be breached for gold to surpass the
highs from last week.

Spot silver was unchanged at $28.90, platinum climbed 1.2% to $993.10, while
palladium lost 0.4% to $944.00.

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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