Bulls n Bears Daily Market Commentary : 12 March 2024

Wed Mar 13 07:56:28 CAT 2024

 <http://www.bullszimbabwe.com> Bullszimbabwe.com         <mailto:bulls at bulls.co.zw> Views & Comments        <http://www.bullszimbabwe.com> Bullish Thoughts        <http://www.twitter.com/BullsBears2010> Twitter         <https://www.facebook.com/BullsBearsZimbabwe> Facebook           <http://www.linkedin.com/pub/bulls-n-bears-zimbabwe/57/577/72> LinkedIn          <mailto:%20bulls at bullszimbabwe.com?subject=Unsubscribe> Unsubscribe

Bulls n Bears Daily Market Commentary : 12 March 2024

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

ZSE 4Q23 run boosts fund managers in F23 as FUM rises to $16.88trln

HARARE – The bull run seen on the Zimbabwe Stock Exchange in the fourth quarter saw the fund management sector increase its exposure to the market to 42.58% from 36.36% in the previous September quarter. In the fourth quarter, the ZSE put on 66.48%, recovering from a 26.12% decline seen in Q3.

According to data from the Securities and Exchange Commission, the industry saw an increase in total Funds Under Management in the quarter of 32.81% to $16.88 trillion, which translates to US$2.7 billion at the official exchange rate at the end of the year.

Despite the gain in equities, properties, remain the dominant investment asset at 45.81%, a decline from 50.33% in September.  Money market investments saw a marginal decline to 3.27% from 3.59% in September, while investment in unquoted equities also slipped to 4.15% from 5.57%.  The remaining 4.20% investment exposures in the asset management industry were attributed to cash/call deposits, bonds, and other investments.

The growth in FUM represents a significant annual increase of 954% from the previous year's value of $1.6 trillion. The industry average for FUM was $733.84 billion for the period ending December 31, 2023.

According to SECZim, the capital market sector remained stable throughout 2023 despite an increasing risk outlook due to factors like the depreciation of the ZWL currency, inflation, and the scarcity of foreign currency.  The industry's total operating profit and average operating profit for the quarter amounted to $20.04 billion and $742.16 million, respectively. Total operating profit for the industry increased by 510.49% from the $3.28 billion recorded in September.

Among the investment management firms, OMIG leads the pack with the highest FUM share of 46.20%, followed by CBZ and TN Asset Management with FUM shares of 10.09% and 7.93%, respectively. It is worth noting that certain firms like Simuka Asset Management, Wealth Access Asset Management, and Cornerstone Asset Management were not included in the analysis due to various operational, financial, and governance reasons.

Key concerns currently arising within the capital market are the 180-day vesting period, high capital withholding tax, and high transaction costs.  Finance Minister Mthuli Ncube, however, said these would be addressed once the new currency stabilisation measures are successful.  The sector most affected by this within the capital markets are securities-dealing firms. According to SECZim, stockbroking firms’ profitability was rated weak for Q4.

Eleven out of 21 operating securities dealing firms recorded operating profits, while the remaining ten reported operating losses. Overall profitability in nominal terms grew 384.15% to $1.26 billion from a loss of $444.11 million.

Platinum Securities led the securities dealing firms with a market share of 14.71%, followed by IH Securities and Morgan & Co. with 12.63% and 12.32%, respectively. Lynton Edwards held the highest market share on the VFEX at 40.50% as of December 31, 2023. Morgan & Co. and IH Securities followed suit, achieving market shares of 15.10% and 10.79%, respectively.

Global Currencies & Equity Markets

South Africa

South African rand weakens after US inflation data

(Reuters) - South Africa's rand weakened on Tuesday as the U.S. dollar rose after higher-than-expected U.S. inflation data.

At 1518 GMT, the rand traded at 18.7125 against the dollar , about 0.16% weaker than its previous close.

The dollar index was up about 0.26% after data showed inflation rose more than expected last month for the world's largest economy, slightly paring back expectations of an interest rate cut by the Federal Reserve in June.

-

Like most emerging market currencies, the rand takes direction from global factors such as U.S. monetary policy in addition to domestic economic releases.

South Africa has no major data due until Thursday, when gold, mining and manufacturing production figures for January will be released.

The stock market's Top-40 (.JTOPI), opens new tab index closed 0.08% higher.

South Africa's benchmark 2030 government bond was weaker, with the yield up 6 basis points to 10.165%.

Nigeria

Naira depreciates by 7.32% to N2,050 against Great British Pound at the black market   

The parallel market exchange rate has experienced a substantial decline, reaching a low point of N2050 per Great Britain Pound (GBP), reflecting persistent demand pressures that have contributed to the erosion of the currency’s value. 

This signifies a significant decrease of 7.32% or N150 compared to the rate of N1,900 recorded the previous day. 

Simultaneously, as of 11:54 am on Tuesday, black-market exchange rates have continued to undergo devaluation of the Nigerian Naira. 

Despite the Central Bank of Nigeria’s (CBN) concerted efforts to enhance foreign exchange (forex) supply through various policy interventions, challenges persist within the forex market. 

Similarly, the Naira depreciated against dollar in the parallel forex market, where forex is unofficially traded, with the exchange rate quoted at N1,630/$1, reflecting a 1.84% decrease from the N1,600 rate it closed at the previous day.   

Additionally, the Naira weakened against the Euro by 0.57%, trading at N1750/EUR1 compared to N1740/EUR1 reported the previous day.  

Factors Influencing the Depreciation 

Market analysts attribute the recent decline to a consistent surge in demand for dollars that has been evident since the commencement of January. The primary contributors to this heightened demand include:  

A substantial portion of the demand is attributed to businesses actively seeking to restock goods or acquire raw materials, necessitating a higher demand for foreign exchange.  

Individuals pursuing overseas studies have also played a significant role in driving the demand for dollars. This trend is likely connected to the need for tuition payments and related educational expenses.  

Nairametrics reported recently that financial analysts are advocating for a re-evaluation of policies to safeguard the Nigerian Naira amid escalating forex rates, despite efforts by the Central Bank of Nigeria (CBN) to stabilize its value. 

The recent decline in the Naira’s value across official and parallel markets has prompted suggestions from financial experts to mitigate currency volatility and prevent further depreciation. 

The CBN had announced a series of measures aimed at enhancing transparency and stability in the foreign exchange market while addressing malpractices. 

However, while the analysts acknowledge the positive aspects of the CBN’s recent policies aimed at managing pressures in the foreign exchange market, they highlight that these measures fail to directly address the fundamental issue of limited supply. 

Analysts interviewed by Nairametrics in response to the Naira’s sharp decline following exchange rate harmonization propose reassessing the government’s foreign exchange management strategy. 

They advocate for shifting towards a managed float system to allow flexibility in implementing initiatives to bolster foreign exchange reserves, such as boosting oil production, enhancing agricultural exports, and incentivizing foreign remittances. 

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar advances after firmer-than-expected inflation data

(Reuters) - The U.S. dollar rose in choppy trading on Tuesday, after data showed hotter-than-expected inflation last month for the world's largest economy, slightly paring back expectations of an interest rate cut by the Federal Reserve at its June policy meeting.

It was a volatile session, with the U.S. dollar initially jumping after the data, then falling and eventually rising after the market digested the report. The dollar index was last up 0.2% at 102.95 .

-

The Labor Department report showed that the Consumer Price Index (CPI) rose 0.4% in February, in line with the forecast for a 0.4% increase. On a year-on-year basis, the CPI gained 3.2%, compared with the estimated 3.1% rise.

Excluding volatile food and energy components, the core figure rose 0.4% month-on-month in February, compared with an estimated 0.3% rise. Annually, it gained 3.8%, compared with the forecast of a 3.7% increase.

-

"The CPI wasn't a significant surprise, but it's firmer than expected. While some of the details of the report were encouraging, it still suggests that we're not quite at the point that the Fed should be comfortable cutting rates," said Vassili Serebriakov, FX strategist at UBS in New York.

"It probably keeps the debate alive about the June cut, but probably more immediately this plays into what the Fed will be projecting in terms of the dot plot at the next meeting. We'll probably be discussing the possibility that there may be less than three cuts."

U.S. rate futures have priced in a 69% chance of a rate cut at the June policy meeting, according to the LSEG's rate probability app. That was at roughly 71% late on Monday.

The market has also factored in two more cuts of 25 basis points each for the year, taking down the fed funds rate to 4.49% by the end of 2024.

Next on the agenda for currency investors would be U.S. retail sales, an indication of consumer spending which has been resilient so far, and producer prices.

-

Against the yen, the dollar was up 0.5% at 147.66 . The yen fell after Bank of Japan Governor Kazuo Ueda offered a slightly bleaker assessment of the country's economy than he had in January, while Finance Minister Shunichi Suzuki said Japan was not at a stage where it could declare deflation as beaten.

Their remarks come ahead of the BOJ's policy meeting next week.

Japan's largest trade union confederation, Rengo, has demanded pay rises of 5.85% this year, topping 5% for the first time in 30 years.

One-week implied volatility on dollar/yen , which measures expectations for price swings in the currency pair, jumped to 12.115% on Tuesday, its highest level since December, and was last at 10.877.

Elsewhere, the euro was flat at $1.0925, after hitting a roughly two-month high last week.

Analysts expect the European Central Bank to communicate on Wednesday the outcome of discussions on the Eurosystem’s operational framework review.

Money markets fully price in a first ECB rate cut by June and a total of 100 basis points of easing by year-end.

In cryptocurrencies, bitcoin was down 1.3% to $71,197, but remained just a whisker away from a record high set in the previous session.

Ether peaked at $4,093.70, its highest since 2021, though later pared some of those gains to stand at $3,971.50, down 1.5%.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Price of Gold under pressure from Fed rate cut doubts after inflation data

(Reuters) - Gold prices remained under pressure on Tuesday, dropping more than 1%, after a hot U.S. inflation report dimmed prospects of the Federal Reserve cutting interest rates soon.

Spot gold fell 1.4% to $2,153.05 per ounce as of 3:08 p.m. ET (1908 GMT), retreating from a record high of $2,194.99 reached on Friday.

U.S. gold futures settled 1% lower at $2,166.1.

U.S. consumer prices increased solidly in February, suggesting some stickiness in inflation. Data showed the Consumer Price Index (CPI) rose 0.4% on a monthly basis in February. Annually, it increased 3.2%, above the 3.1% forecast.

-

"CPI comes in a bit sweaty but the market was expecting a high print so the initial reaction was a bit muted but prices have been volatile since," said Tai Wong, a New York-based independent metals trader.

He said gold bulls would still look for reasons to drive it higher. "Now focus will shift to next week's Fed meeting where there will be an updated dot plot," Wong said, referring to central bankers' interest rate forecasts.

-

The market is still pricing an around 70% chance of a U.S. rate cut by June, according to the CME FedWatch tool. The next U.S. central bank policy meeting is due on March 20.

Low interest rates help gold prices as they reduce the opportunity cost of holding the precious metal that earns no interest.

In the short run, prices will see some consolidation and probably stabilise around $2,100 level and will break above $2,200 by the end of the second quarter this year, said Aakash Doshi, head of commodities, North America at Citi Research.

Spot platinum fell 1.5% to $919.20 per ounce, palladium was steady at $1,031.04.

UBS said in a note it expects palladium to stay oversupplied over the coming years, as demand for autocatalysts keeps declining.

Silver shed 1.5% to $24.08.

INVESTORS DIARY 2024

Company

Event

Venue

Date & Time

2024 auction tobacco marketing season opens

13 march

Good Friday

march 29

Easter Monday

1 April

Independence Day

April 18

Workers day

1 May

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

Website:            www.bullszimbabwe.com 

Blog:                 www.bullszimbabwe.com/blog

Twitter (X):        @bullsbears2010

LinkedIn:           Bulls n Bears Zimbabwe

Facebook:          www.facebook.com/BullsBearsZimbabwe

Skype:         Bulls.Bears 

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.

 (c) 2024 Web: www.bullszimbabwe.com Email: bulls at bullszimbabwe.com Tel: +27 79 993 5557 | +263 71 944 1674

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0001.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image001.png
Type: image/png
Size: 34378 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0001.png>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image002.jpg
Type: image/jpeg
Size: 135717 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0003.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image003.jpg
Type: image/jpeg
Size: 40113 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0004.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image004.jpg
Type: image/jpeg
Size: 37760 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0005.jpg>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: oledata.mso
Type: application/octet-stream
Size: 130904 bytes
Desc: not available
URL: <http://listmail.bulls.co.zw/pipermail/bulls/attachments/20240313/bc8c55a6/attachment-0001.obj>