Bulls n Bears Daily Market Commentary : 20 May 2024

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Bulls n Bears Daily Market Commentary : 20 May 2024

 

 	

 

 

 	


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

 

WestProp sees biggest trades yet on VFEX, Innscor to expand Bulawayo plant further

 

HARARE – Baker’s Inn, a division of Victoria Falls Stock Exchange-listed Innscor Africa, is set to put up a second plant at it Belmont factory in Bulawayo as part of its expansion plans.

This comes as the company officially commissioned a US$27.8 million plant, last week, which is now operating at full capacity, producing 8 000 loaves of bread per day, and has yielded significantly improved loaf quality and consistency. The second line is part of the company’s plan to ramp up capacity to supply the country’s southern region.

Innscor chairman Addington Chinake said that company would soon be installing a second line “imminently”, to further increase capacity for the southern region, which encompasses Midlands and the two Matabeleland provinces. He was speaking at the official commissioning of the first line at the Leeds Road Factory in Bulawayo where President Emmerson Mnangagwa was guest of honour.

Over the past two financial years, Innscor has invested US$125 million in expansion capital. Much of this investment has recently been commissioned, or is in the final stages of being commissioned. The group said that efforts continue to also be directed toward ensuring new investments achieve targeted returns, while overall free cash generation remains a vital performance metric for the Group, in support of future financing and investing activities.

The Bulawayo plant contributes more than a quarter of the company’s bread supply and has brought increased efficiency for Baker’s Inn, with reduced waste and fuel costs. This is a significant step forward for Baker’s Inn. With the Bulawayo plant up and running, the company is one step closer to achieving its goal of providing the freshest, tastiest bread to every corner of the nation.

Zimbabwe’s national bread demand currently at 950,000 loaves per day.

In its latest trading update for the third quarter to March, Innscor said that loaf volumes at its Baker’s Inn division closed 16% ahead of the comparative nine-month period, enhanced by a consistent flour price, and the maintenance of a convenient exit price point to the consumer, notwithstanding the change in the VAT status of the product during the quarter under review.  Following the changes in the local currency regime, the price of a loaf is at ZiG 13.50.

The VFEX added a marginal 0.22% to 99.33. Turnover was quite strong at US$407 413.53 after West Property Holdings recorded its biggest trade since its listing.  Traded volume was at 209 495 with Innscor contributing the most at 107 895. But, it was WestProp which brought in the most value at US$350 180 after 35 018 shares traded. The property stock closed unchanged at US$10.

Zimplow led the risers with an 11.73% gain to 2 US cents while fractional gains were seen in Simbisa, First Capital, Innscor and Axia.

Elsewhere, gains in mostly heavyweight stocks ensured that the broader Zimbabwe Stock Exchange start the week in positive territory although lacking momentum from the relatively upbeat trading updates released by the majority of companies for the quarter to March.

The All Share Index put on 0.96% to 95.56 in a session which yielded nine risers against five fallers. Turnover was subdued at ZiG 792 576.44 after 711 300 shares exchanged hands in 155 trades. Star Africa led in volume at 295 400 while Delta brought in the most value at ZiG 603 441.20. Foreign participation was minimal.

 

The Top Ten Index rose 0.96% to 94.26. Hippo put on 13.01% to 400c and Econet added 6.79% to 134.69c. First Mutual was 5.41% higher to 195c.  

 

There were losses in EcoCash, which was down 3.43% to 20.39c and Delta, shedding a marginal 0.03% to 710.77c.  

 

The Medium Cap Index was 0.48% ahead to 98.10. Willdale led the risers with a 14.29% gain to 3c and Nampak was 10.46% ahead to 44.20c ahead of an EGM to approve a change in auditors following the announcement by PwC to exit Zimbabwe.

Star Africa was the day's worst performer with a 13.52% loss to 0.71c

OK Zimbabwe fell 11.78% to 44.09c ahead of the imminent release of its March finals and Mash Holdings pared 0.06%.-finx

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity Markets Ghana

 

South Africa

 

South African rand slips as investors seek clues on US interest rates

(Reuters) - The South African rand weakened on Monday against a buoyant dollar after cautious comments by a Federal Reserve official propped up the U.S. currency.

 

At 1616 GMT, the rand traded at 18.1775 against the dollar , about 0.2% weaker than its previous close. Earlier in the day, it had risen to its strongest level since August 2023.

The dollar index was up about 0.1% against a basket of currencies.

 

The rand slipped after Atlanta Fed President Raphael Bostic said on Monday that it will take a while for the U.S. central bank to be confident that inflation was on track to return to the central bank's 2% goal.

-

Markets will this week look for hints on the future interest rate path of the world's biggest economy when more Fed officials speak and the minutes of the Fed's last meeting are published on Wednesday.

 

The rand often takes cues from global drivers, such as U.S. monetary policy in addition to local factors.

Its recent gains have been consistent with broader emerging market currencies' performance, said Danny Greeff of ETM Analytics.

-

At home, opinion polls suggest the ruling African National Congress party's majority is at risk after 30 years in power, which could force it to form a coalition government, and the uncertainty about the outcome of the May 29 could weigh on the currency.

"With the elections now in sight, the ZAR might struggle for further gains... volatility could be the order of the day as the market will need to interpret what the election outcome means for coalition politics on a national level," Greeff said.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index (.JTOPI), opens new tab and the broader all-share index (.JALSH), opens new tab closed about 0.7% stronger.

South Africa's benchmark 2030 government bond was stronger, with the yield down 7 basis points to 10.300%.

 

 

 

 

Nigeria

 

Naira appreciates marginally on 93% higher FX supply on official market 

 

The exchange rate between the naira and dollar in the official NAFEM Window has appreciated to N1,468.99/$1 on Monday, May 20, 2024.  

 

This means that the week started with a 1.93% increase when compared to the  N1,497/$1 on Friday, May 17, 2024. 

 

It had earlier recorded a 2.5% gain from the N1,593.9/$1 recorded on Thursday, which was the weakest since March 20 this year. 

 

 

This was the second consecutive appreciation this month amid severe currency depreciations. The first one was recorded on May 3 and May 6, 2024. 

 

93% increase in dollar supply on official market 

The increase in forex turnover to $161.41 million, a 93.31% rise from $83.5 million recorded on Friday, likely contributed to this appreciation.  

 

The increase in liquidity on the market also comes after the daily turnover in the forex market experienced a significant drop in turnover between Thursday, May 16, and Friday, May 17, 2024, recording a steep 69.4% decline. 

The amount on Friday was the lowest turnover rate since January 20, 2024.  The trading dynamics on Monday further affirmed the erratic nature of the market.

 

During intra-day trading, the exchange rate peaked at an intra-day high of N1,550/$1, highlighting a temporary surge in dollar sales.  

Conversely, the intra-day low was N1,400/$1, reflecting periods of heightened buying pressure on the naira.   

The sharp movements within a single trading day suggest heightened uncertainty and instability, making it challenging for businesses and investors to plan their financial activities.   

 

What you should Know 

Nigeria’s foreign exchange (FX) reserves increased by approximately $535 million over the past 28 days. 

 

The latest data from the Central Bank of Nigeria (CBN) revealed a steady upward trend in the reserves, showcasing the country’s resilience in maintaining its financial stability amidst challenging economic conditions.  

 

The CBN reported that the FX reserves rose from $32.107 billion on April 19, 2024, to $32.642 billion by May 16, 2024. This growth represents a boost for the country’s external reserves, which play a crucial role in stabilizing the naira and supporting the economy.  

The apex bank recently activated plans to double foreign-currency remittance flows through formal channels by granting 14 new (IMTOs) Approval-in-Principle (AIP), according to the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.  

 

Sidi Ali noted that increasing formal remittance flows will help the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds. 

The ongoing Monetary Policy Committee (MPC) meeting of the CBN) may be a critical factor influencing investor sentiment and attracting more foreign exchange into country as the apex bank struggles to curb inflation and FX volatility.  

 

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

Dollar edges higher as investors await Fed guidance

(Reuters) - The dollar edged up against the euro on Monday as investors awaited further clues on the path of U.S. interest rates in the wake of cautious comments from Federal Reserve officials, even as inflation showed signs of cooling.

Federal Reserve officials are not ready to say inflation is heading to the U.S. central bank's 2% target after data last week showed a welcome easing in consumer price pressures in April, with several on Monday calling for continued policy caution.

Atlanta Fed President Raphael Bostic said on Monday it will take a while for the Federal Reserve to be confident that inflation is on track back to its goal.

 

"The issue right now is when are we going to be certain that inflation is clearly on a path back to 2%. I think it's going to take a while before we know that for sure," Bostic said in an interview with Bloomberg Television.

Speaking at the Mortgage Bankers Association conference in New York, Fed Vice Chair Philip Jefferson said it is too early to tell whether the recent slowdown in the disinflationary process will be long lasting.

 

The euro was 0.05% down against the dollar at $1.0863. Against the yen , the dollar was up 0.4% to 156.26 yen.

Data last week showed U.S. consumer prices rose less than expected in April, leading to markets pricing in 50 basis points of Fed rate cuts this year.

With little in the way of economic data on the calendar for the day, most major currency pairs clung to tight trading ranges on Monday.

"I think after CPI passed last week the FX market is rather lacking a catalyst at this stage," said Michael Brown, market analyst at online broker Pepperstone in London.

"While the FOMC (Federal Open Market Committee) calendar is, again, stupendously busy, it seems there's little fresh information that speakers can add at this stage, especially with the reaction function so well-signposted, another hike all but ruled out, and a couple more promising inflation figures, at least, needed to provide the requisite confidence of inflation returning towards 2% before the first cut can be delivered," Brown said.

 

Survey-based gauges of the economy for the euro zone, Germany, the UK and the United States are due this week.

The euro remained not far from the nearly two-month high of $1.0895 it touched last week. It is up 1.8% so far in May, boosted by a fall in the dollar on the back of softer U.S. growth and inflation data, as well as a pickup in the euro zone economy.

With the Japanese yen weaker on the day, traders remained on alert for signs of government intervention. The currency has moved in tight ranges in the past couple of trading days after a tumultuous start to May in the wake of suspected rounds of currency interventions by Tokyo to prop up the yen.

 

Sterling was up 0.07% at $1.2711 on the day after touching a two-month high of $1.27255, ahead of a UK inflation report due on Wednesday.

The Australian dollar was down 0.3% at $0.6671. The Aussie has risen 3% this month amid high Australian inflation. Monday's weakness in the commodity-linked currency despite strength in commodity prices bodes ill for the near-term outlook for the Australian dollar, Pepperstone's Brown said.

 

"(The weakness) on a day with commodities rallying and equities solid enough, (is) perhaps a canary in the coal mine for antipodean bulls," Brown said.

In cryptocurrencies, bitcoin was 2.7% higher on the day at $68,715, a new five-week high.

 

 

 

 

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold price hits $2,450 on rate cut optimism, geopolitical risks

Gold touched a new record of $2,450 an ounce on Monday as increasing optimism over the Federal Reserve’s monetary policy and rising geopolitical tensions paved the way for another rally in the metal.

 

 

Bullion jumped by 1.4% to $2,450.07 per ounce during the session, surpassing a previous intraday high reached in April. By 11:30 a.m. EDT, it had retreated to $2,424.38 per ounce, for a 0.4% gain.

 

US gold futures saw a similar rise of 0.5% at $2,429.60 per ounce, having hit $2,454.20 earlier in the day.

 

 

The metal eased off its high on profit-taking but the outlook remains positive and “new records could be on the way,” explained Fawad Razaqzada, market analyst at City Index, in a Bloomberg note.

 

Traders have been boosting bets in recent sessions that the Fed may reduce borrowing costs as early as September, a scenario that would bolster gold since it doesn’t pay interest.

 

A weaker dollar has provided the precious metal with additional support. Recent economic data releases indicated that the US economic recovery is slowing, which could lower inflation and reduce the need for prolonged tight monetary policy, according to Razaqzada. 

 

Broader macroeconomic drivers are also at play for precious metals and other commodities such as copper.

 

“China’s various stimulus measures have bolstered demand or perceived demand for commodities, and we’ve seen improvements in eurozone and UK data,” said Razaqzada.

 

Rising Middle East tensions

Gold’s haven status entered the spotlight after news that Iran’s President Ebrahim Raisi, widely seen as a candidate to become the country’s next supreme leader, was killed in a helicopter crash on Sunday. His death came at a time of turmoil in Middle East due to the Gaza war.

 

The latest incident adds a sense of rising geopolitical risks across the region after a China-bound oil tanker was hit by a Houthi missile in the Red Sea on Saturday.

 

Hedge funds trading Comex futures boosted bullish bets on gold to a three-week high in the week ending May 14, according to data from the Commodity Futures Trading Commission.

 

The gains suggest that bullion has broken out of what’s been a fairly narrow trading range in recent weeks amid a lack of clarity over the US rate path. Prices are about 17% higher this year.

 

The metal’s strength has been linked to central bank purchases, robust demand from Asia — especially China — and elevated geopolitical tensions in Ukraine and the Middle East.

 

The recent rally also spilled over into other metals, including its sister metal silver, which earlier had climbed to its highest since December 2012.

 

 


 

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 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

 

 	

 

 

 	
							

 

 

 

 

 

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