Bulls n Bears Daily Market Commentary : 14 May 2024

Wed May 15 09:03:12 CAT 2024

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Bulls n Bears Daily Market Commentary : 14 May 2024

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

ZSE extends gains...

The ZSE market extended gains in the second session of the week as the
All-Share Index rose 0.32% to 94.55pts while,the Blue-Chip Index firmed up
0.35% to 92.55pts. The Agriculture

gained 0.07% to 96.24pts . Seed producer SeedCo headlined the top performers
of the day on a 9.46% jump to $1.5325 , followed by retailer OK Zimbabwe
that surged 8.01% to close at $0.5300. Banking group CBZ advanced 2.78% to
$3.7000 while, First Mutual Holdings climbed up 1.34% to end pegged at
$1.7633. Sugar processor Hippo Valley completed the top five  winners  of
the  day  on  a  0.29%  uplift  to  $3.5100. Contrastingly, brick
manufacturer Willdale led the lagga rds of the day on a 12.25% drop to
$0.0351 while, Fidelity trailed on a  12.12%  retreat to settle  at $0.5800.
Star  Africa  declined 9.09%  to  $0.0090  while,  Mashonaland  Holdings
trimmed 5.14% to $0.1316. Telecoms giant Econet capped the top five fallers
of the day on a 0.12% slide to end the day pegged at $1.2500 . The market
closed with a positive breadth of one as six counters recorded gains against
five that faltered.

Activity aggregates enhanced in the session as volumes traded ballooned
139.11% to 7.08m shares while, value outturn grew 117.61% to $9.67m. Econet
highlighted the activity aggregates of the day after contribut ing 93.91% to
total volumes and 85.87% to the value outturn. The other notable value
driver of the day was Delta that accounted for 12 .92% of the outturn. A
tota l of 4,968 units exchanged hands in the ETF section. Morgan and Co
Multi sector ETF inched up 0.03% to close at $0.3800 while, the OMTT ETF
exchanged 4,220 units f lat at $0.1100. Tigere REIT eased 5.73% to end the
day pegged at $0.5946 after 73,508 units exchanged hands in the session.
–efesecrities 

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets

South Africa

South African rand slips as Q1 unemployment rate climbs

(Reuters) - South Africa's rand weakened on Tuesday after local data showed
the country's unemployment rate rose in the first quarter and local mining
output fell in March.

At 1338 GMT, the rand traded at 18.4175 against the dollar , about 0.3%
weaker than its previous close.

The dollar last traded about 0.13% stronger against a basket of global
currencies.

South Africa's unemployment rate rose for the second quarter in a row to
32.9% in the first three months of this year, bringing it closer to the
record high of 35.3% reached in late 2021 during the COVID-19 pandemic.

"The outlook for the job market remains poor. Employment in the services
industries will likely stagnate as restrictive monetary policy continues to
weigh on domestic demand, hurting confidence," Nedbank analysts said in a
research note.

Meanwhile, total mining output fell 5.8% year on year in March, statistics
agency data showed.

Global markets await the latest U.S. inflation print on Wednesday.      

On the stock market, both the Top-40 (.JTOPI), opens new tab and the broader
all-share (.JALSH), opens new tab indexes were trading around 0.3% higher.

Anglo American Platinum's Johannesburg-listed shares (AMSJ.J), opens new tab
fell as much as 10% and were last down 7.1%, after parent Anglo American
(AAL.L), opens new tab said in a strategic review that it was exploring a
demerger of its troubled platinum unit.

South Africa's benchmark 2030 government bond was weaker, with the yield up
4 basis points to 10.505%.

Nigeria

Naira slide swells oil loans by 78% to N11.8trn

Bank credit to oil and gas companies in Nigeria rose 78 percent to N11.8
trillion ($27 billion) in 2023 with the naira devaluation stoking the surge.

Findings showed the oil and gas sector topped all sectors with the highest
bank credit allocation, outpacing manufacturing (N7.73 trillion) and
Finance, Insurance & Capital Market (N4.33 trillion) in 2023.

Banks find lending to the oil and gas sector, the single biggest earner of
foreign exchange for Africa’s top oil producer, attractive because of the
companies’ huge capital outlays, large intraday cash flows (in the case of
downstream companies), and sizable foreign currency inflows (in the case of
upstream and midstream companies).

Data from the Central Bank of Nigeria (CBN) indicate that oil and gas firms
have the most foreign currency (FC)-denominated debts, and their naira
equivalents surged on the back of the large devaluation in June which paved
way for a near 40 percent decline in the naira’s value against the dollar at
the end of the year.

Accounts for 26% of total loans

Firms operating in the upstream and services sub sectors owed N8.3 trillion,
up from N4.8 trillion in May 2023 while the downstream, natural gas and
crude oil refining subsectors owed N3.4 trillion as of December 2023 as
against N1.9 trillion in May.

“If oil firms can restructure their costs or increase revenue or both so
that the extra costs from the higher interest rates are cancelled out, then
it may not lead to higher NPLs. So it’s a concern at best but not a
certainty and depends on various factors that are too early to tell,” the
chief financial officer of a tier-one bank said.

“The industry NPL ratio of 4.15 percent at the end of January 2024, which is
itching towards the industry regulatory threshold of 5 percent should be
monitored closely,” he added.

David Omojomolo, Africa economist at London-based Capital Economics, said
for borrowers who only earn naira, servicing these debts will become more
expensive.

“That said, while data is hard to come by, loans to the oil and gas sector –
whose income is in dollars – probably account for a large share of total
foreign currency lending,” he said.

 banks allowing loan repayment till maturity – IMF

A new report by the International Monetary Fund (IMF) said although
non-performing loans of Nigerian banks stood at 4 percent for commercial
banks but it’s rapidly increasing at microfinance banks (14 percent),
development finance institutions (19 percent), and mortgage banks (20
percent).

“Some commercial banks have delayed NPL recognition by granting bullet
loans,” IMF said in its latest article IV document.

 <mailto:info at bulls.co.zw> 

Global Global Markets

US Dollar lost some ground as markets await April's CPI report from the US

The US Dollar Index (DXY) is currently trading at around 105.35, displaying
minimal losses. The US Producer Price Index (PPI) showed no surprise on the
annual print, but monthly prices rose more than expected. Jerome Powell
attached to the script given in the last Federal Reserve (Fed) decision that
interest rates might have to be kept higher for longer but that cuts will
eventually come and inflation will get back to target.

The US economy is displaying robust growth and persistent inflation, which
is making the Fed remain cautious about cutting rates. On Wednesday, April’s
Consumer Price Index (CPI) data will likely impact the expectations on the
easing cycle, which is seen starting in September.

Daily digest market movers: DXY is mildly down as markets digest PPI data
ahead of CPI

US Bureau of Labor Statistics revealed that the Producer Price Index (PPI)
increased by 2.2% on a yearly basis in April. Annual core PPI and monthly
core PPI both posted a rise of 2.4% and 0.5%, respectively, in line with
March figures.

Both PPI and core PPI reported a 0.5% rise in April MoM.

The odds of a cut in June and July remain low as the best-case scenario for
the markets at the moment is that the Fed will start cutting in September. A
cut in November is fully priced in.

DXY technical analysis: DXY posts correctives but maintains bullish bias

On the daily chart, the Relative Strength Index (RSI) traces a negative
slope in negative territory, which indicates that selling momentum is still
present. In addition, the Moving Average Convergence Divergence (MACD) shows
rising red bars, which demonstrates increasing bearish momentum in the
short-term outlook.

That being said, the DXY’s position relative to its Simple Moving Averages
(SMAs) paints a different picture. Currently, the index is below the 20-day
SMA, showcasing the recent bearish control, but the fact that it is above
the 100 and 200-day SMAs points out that the underpinning support from the
bulls is not all lost.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold shines amid geopolitical uncertainties

The World Bank’s precious metals price index climbed 9 percent in April 2024
(m/m), continuing its upward trajectory from the first quarter. Gold reached
a new nominal record in April, while silver approached its early 2021
record. Platinum prices also rebounded during the month. Strong demand,
fueled by heightened geopolitical tensions, has been supporting the price
surge. The index is expected to increase by 8 percent in 2024 compared to
2023. Stronger gold demand from emerging markets and developing economies
(EMDEs), amid heightened geopolitical uncertainty, is a key upside price
risk. Conversely, sluggish industrial activity in major economies could
weaken demand, and hence prices, for silver and platinum.

Gold prices reached an all-time nominal high of $2,331 per troy ounce in
April. The surge builds on a 7 percent increase in the first quarter of 2024
(q/q), continuing a period of elevated prices that began in 2020. Recent
price increases have been supported by strong demand from several EMDE
central banks and increased activity in exchange-traded funds (ETFs) in
China, amid heightened geopolitical uncertainty. As a safe-haven asset, gold
often increases in price during periods of elevated geopolitical tensions
and policy uncertainty. Record central bank buying—led by China, India, and
Türkiye—bolstered gold demand in the first quarter of 2024. Notable, China’s
central bank extended its gold purchases for the 17th consecutive month in
March 2024, setting a record for the longest reported streak of monthly
purchases. In contrast, demand from the jewelry, technology, and investment
sectors remained subdued in 2024Q1. Gold prices are expected to be 8 percent
higher in 2024 compared to 2023, supported by continued robust demand from
EMDE central banks, retail investment (where gold jewelry serves as a
quasi-investment in some countries), and strong safe-haven demand.

Silver prices surged by 12 percent in April 2024 (m/m), following a period
of relative stability in the first quarter. This recent increase in silver
prices, mostly attributed to the recovery of industrial activity and some of
the factors influencing gold prices, brought the gold-to-silver price ratio
closer to its 10-year average. Modest growth in silver demand is anticipated
for 2024, buoyed by industrial demand—from expanding vehicle electrification
and the development of renewable energy infrastructure—as well as an
expected recovery in jewelry and silverware demand. An anticipated increase
in mine production from key sources such as Chile, Mexico, and Russia is
expected to support supply growth in 2024. Silver prices are expected to
increase 7 percent this year compared to 2023, with an additional 4 percent
uptick forecasted for 2025.

Platinum prices rebounded in April 2024, rising by 3.5 percent after
experiencing a slight dip in the first quarter. Following a 25 percent surge
in demand in 2023, platinum demand is expected to moderate in 2024. This
anticipated deceleration is due to modest growth in the automotive sector
and jewelry demand, which together accounts for about 60 percent of global
platinum demand, offset by a contraction in industrial demand—mostly driven
by the fiberglass and petrochemical sectors. Nonetheless, platinum prices
are likely to be supported by reduced production from Russia and South
Africa, the world’s two largest platinum producers, as well as a drop in
secondary (recycling) supply. As a result, platinum prices are expected to
increase by 4 percent 2024, with a further 5 percent increase anticipated in
2025.

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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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
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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

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