Bulls n Bears Daily Market Commentary : 07 May 2024

Wed May 8 03:47:37 CAT 2024

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Bulls n Bears Daily Market Commentary : 07 May 2024

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

ZSE lower amid struggle for ZiG stability and confidence...as FinMin says
ZiG is now the official currency for all transactions 

HARARE - Econet Wireless supported Zimbabwe Stock Exchange turnover on
Tuesday although the wider market remained in negative territory amid
concerns that the authorities are taking slow steps towards establishing
currency stability and instilling confidence in the ZiG. The local currency
is currently being quoted between 20 and 22 on the alternative market
against 13.67 on the official market.

.

In a statement, the Confederation of Zimbabwe Retailers said manufacturers
and suppliers in Zimbabwe are opting for an 80% USD to 20% ZIG payment
structure, creating a competitive disadvantage for formal retail players.

This disparity not only hampers the growth of formal entities but also
creates an un-level playing field where regulatory compliance becomes a
burden rather than a standard practice. "The reluctance of companies to
transact in ZIG due to challenges in procuring USD for raw materials not
only drives up costs for manufacturers and suppliers but also contributes to
inflationary pressures in the market."

CZR also said the recent surge in employment costs, with salaries rising by
20 to 30% in USD terms, has further complicated the situation. Employees are
seeking USD-denominated salaries to shield themselves from the perceived
erosion of purchasing power associated with the Zimbabwean Dollar.

CZR put forward several proposals to address the currency challenge and
these include; treating ZIG as equal to other currencies by allowing taxes
to be paid in ZIG alongside USD at the taxpayer's discretion; encouraging
acceptance of ZIG by incentivizing manufacturers and suppliers or
establishing mandates that ensure a more equitable currency ratio in
transactions; reducing IMTT costs in ZIG to 0.5% to make transactions more
competitive in the informal market and denominating fees and charges in ZIG
to make it the primary currency for local payments.

Finance Minister Mthuli Ncube told Parliament yesterday that ZiG will
eventually become the primary currency for local payments once the
authorities have completed the recalibration process. But in a statement
this afternoon on the transition to ZiG, the Finance Minister said that
effective immediately, the country should accept and recognise ZiG as the
official currency for all financial transactions and payments for goods and
services.

He said that there is no basis for any organisations and economic agencies
to use any other exchange rate other than the market-determined interbank
rate. To ensure compliance, Ncube said government will soon be introducing
the necessary regulations to ensure that business sticks to the official
rate for pricing.

He also said unless there is specific legislation allowing charges or fees
to be collected in USD only, all collections by government and the private
sector shall be made in ZiG or currencies in the multi-currency basket
without insisting on a specific type of currency or indexing invoices to the
USD.

Meanwhile on the ZSE, turnover was at ZiG5.31 million with Econet
contributing 87% of it after 3.55 million shares with a value of ZiG4.62
million traded. The All Share was 1.21% lower to 96.62. Market bias was
negative but narrowly mixed after 12 stocks registers losses against nine
risers.  Trades were at a lowly 165.

The Top Ten Index lost 1.42% to 94.88. Econet was down 6.22% to 130.03c and
EcoCash lost 5.70% to 26.40c. However, RTG was the standout heavyweight
performer after putting on a marginal 1.59% to 21.03c.

The Medium Cap Index dropped 0.75% to 101.11. Ariston was the day's worst
performer with a 13.31% loss to 4.19c and Zimre Holdings was 12.50% lower to
28c. Zimre recently released its delayed December finals which showed
improved profitability although there was non-compliance with IFRS 17 due to
varied reasons. It will hold its analysts briefing on Thursday.  Dairibord
fell 12.40% to 66.22c.

Mash Holdings led the risers with a 14.73% to 16.75c. The company recently
saw management changes after its managing director moved to Shelter Afrique
in Kenya as chief business officer.  

Art Holdings put on 12.75% to 9.02c taking its market cap to US$2.88 million
and Star Africa was 4.03% higher to 0.88c. Proplastics added 0.32%.

VFEX turnover remained subdued at US$30 084 after 91 694 shares traded. The
All Share was 1.10% lower to 96.60. Edgars was the worst performer losing
19.75% to 1.26 US cents in a low volume trade of 100 shares. Axia was down
5.76% to 9 US cents and Innscor weakness persisted with the company closing
with a 4.6% decline to 40.04 US cents.

Caledonia Mining rose 12.5% to US$18 after 60 shares traded. The mining
group held its AGM in Jersey today. National Foods was 1.73% higher to
US$1.32 while marginal gains were seen in African Sun and Zimplow.-finx

Global Currencies & Equity Markets

South Africa

South African rand gains, awaits US jobs data

(Reuters) - South Africa's rand was stronger on Tuesday with volatility
likely to pick up on U.S. employment data later this week, analysts said.

At 1507 GMT, the rand traded at 18.4350 against the dollar <ZAR=D3>, about
0.2% stronger than its previous close.

The dollar index was last trading down around 0.07% against a basket of
currencies.

"We will probably only see more volatility later this week when the U.S.
releases jobless claims data on Thursday," said Casparus Treurnicht,
portfolio manager at Gryphon Asset Management.

The data out of the U.S. could give hints on the future interest rate path
of the world's biggest economy and the rand often takes it cues from global
factors like U.S. economic data in the absence of local data points.

On the stock market, both the Top-40 (.JTOPI), opens new tab index and the
broader all-share (.JALSH), opens new tab index closed up around 0.25%.

South Africa's benchmark 2030 government bond was stronger, with the yield
down 11 basis points to 10.450%.

Nigeria

Naira lost N63 against dollar at forex 

The naira depreciated by N63.36 per dollar at the foreign exchange market in
the last 24 hours.

FMDQ data showed that the day closed at N1416.57 per dollar on Tuesday, down
from N1,353.21 on Monday.

The naira had recorded a significant gain on Monday.

However, Tuesday's data showed Nigeria's currency depreciated by 4.5 per
cent at the official market.

Similarly, as recorded the previous day, the naira depreciated to N1,430 per
dollar in the parallel market section from N1,400.

The country's currency had continued to experience fluctuation despite the
intervention of the Central Bank of Nigeria.

CBN governor Olayemi Cardoso said the apex bank needs more policy
intervention to stabilise the naira.

However, Nigerians have long waited for naira's stability since the advent
of President Bola Ahmed Tinubu's administration.

Although the naira recorded weeks of stability from February to mid-April,
it was short-lived.

 <mailto:info at bulls.co.zw> 

Global Markets

US dollar rises as yen weakness resumes

(Reuters) - The U.S. dollar rose against most currencies on Tuesday,
steadily gaining ground throughout the day as investors digested the latest
comments from Federal Reserve officials about the possible path of interest
rates.

Minneapolis Federal Reserve President Neel Kashkari said at a Milken
Institute conference that stalled inflation, kept higher in part by housing
market strength means the central bank will need to hold borrowing costs
steady for an "extended period," and possibly all year.

Kashkari did, however, also say it is still possible the Fed could cut if
inflation being to cool again.

The comments came on the heels of remarks from Fed officials on Monday that
seemed to lean toward indicating the central bank's next move would be to
lower interest rates.

"There isn't any consistent trend here other than what we've seen and that
does not point to lower rates as much as various people in the market
certainly and maybe even some people in the Fed itself would like," said
Joseph Trevisani, senior analyst at FX Street in New York.

The dollar index gained 0.26% to 105.42, on track for its first consecutive
daily gain in nearly a month, with the euro down 0.18% at $1.0749.

The greenback strengthened against the Japanese yen for a second straight
session as expectations of large interest rate differentials continued, even
after new warnings from Japanese officials about their willingness to prop
up their currency.

Japan's top currency diplomat Masato Kanda said the country may have to take
action against any disorderly, speculative-driven foreign exchange moves,
signaling the Bank of Japan remained ready to intervene in the market after
two suspected interventions of possibly almost $60 billion last week.

"The big action last week and a little bit before was the BOJ, which has
achieved some success, but there's nothing really to go on right now, so
things are just sort of sitting still," said Trevisani.

Against the Japanese yen , the dollar strengthened 0.55% to 154.73 after
tumbling more than 3% last week, its biggest weekly percentage drop since
early December 2022.

Following last week's Fed policy meeting and softer-than-expected U.S. jobs
report, market expectations for two rate cuts this year have increased, with
expectations for a cut of at least 25 basis points in September currently at
64.5%, according to CME's FedWatch Tool, opens new tab.

With a light economic calendar this week, highlighted by the consumer
sentiment reading from the University of Michigan on Friday, a host of Fed
officials are due to speak, including Fed Governors Lisa Cook and Michelle
Bowman later in the week.

The Australian dollar fell against the greenback after the Reserve Bank of
Australia kept rates steady and held back from taking a hawkish stance,
although RBA Governor Michele Bullock cautioned inflation risks were on the
upside, signaling policy was unlikely to be eased anytime soon.

The Australian dollar weakened 0.53% versus the greenback at $0.6589 after
falling as low as 0.6587 on the day.

Sterling weakened 0.46% to $1.2503 ahead of the Bank of England's policy
announcement on Thursday, where interest rates are expected to be kept
unchanged.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold Price on May 7: Rate Falls With Fed Comments, Consumers in Focus

The spot price of gold declined Tuesday with gains for the U.S. dollar and
possible hints about the future of interest rates from Federal Reserve
officials in focus.

Minneapolis Federal Reserve Bank President Neel Kashkari said Tuesday it
could be likely that interest rates would linger at their current levels for
"an extended period of time."

Yesterday, Federal Reserve Bank of Richmond President Thomas Barkin said he
sees the U.S. economy slowing, which should ease inflation further.

More comments are set to come later in the week from other Fed speakers.

The spot price of gold was 0.4% lower at $2,315.52 per ounce as of 3 p.m. ET
Tuesday as the U.S. dollar gained on the pound and yen, with comments by
several Federal Reserve officials that could give hints as to the future of
interest rates in focus.

Fed's Kashkari Suggests Rates Could Stay High for 'Extended Period'

Minneapolis Federal Reserve Bank President Neel Kashkari said Tuesday it
could be likely that interest rates would linger at their current 23-year
high levels for "an extended period of time." Kashkari indicated he expects
inflation to move "sideways" for a while, pushing the Fed to hold rates
steady. Worries about when the Fed might cut rates could negatively impact
the price of gold.

Fed's Barkin Sees US Economy Slowing

Federal Reserve Bank of Richmond President Thomas Barkin said yesterday he
sees the U.S. economy slowing, which should ease inflation further. He added
that recent volatility in economic data supported the Fed's decision to take
its time on lowering borrowing costs.1

More Fed Speakers Set to Give Comments This Week

Speeches are scheduled this week from a number of other Fed speakers as
well. In addition, the University of Michigan Consumer Sentiment Index will
be released on Friday, giving a glimpse of how consumers feel about
inflation and where it's heading. 

Despite Tuesday's slide, the price of gold remained close to 12% higher for
2024 so far.

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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