Bulls n Bears Daily Market Commentary : 23 May 2024

Fri May 24 07:30:04 CAT 2024

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Bulls n Bears Daily Market Commentary : 23 May 2024

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

ZSE closes 0.21% higher in Thursday's trades ...

The market recorded gains in Thursday's session as the All Share Index
firmed up 0.21% to 97.08pts while, the Blue-Chip Index gained 0.57% to
95.98pts. The Mid Cap Index rose 0.13% to 99.60pts while, on the contrary
the Agriculture lhdex lost 1.73% to 93.14pts. Brick manufacturer Willdale
headlined the top performers of the day on a 13.64% surge to $0.0400,
followed by Econet that edged up 3.82% to close at $1.5937. Star Africa
ticked up 1.32% to $0.0070 while, beverages giant Delta rose 0.46% to
$7.1351. Mashonaland Holdings capped the top five winners of the day on a
0.37% lift to end the day pegged at $0.1355. In contrast seed producer Seed
Co led the laggards of the day on a 13.49% drop to $1.7021 while, fintech
group Ecocash Holdings tumbled 6.00% to settle at $0.1638. Cigarette
manufacturer BAT declined 0.10% to $24.8246 while, FBC shed 0.02% to
$1.8345. Retailer OKZIM completed the top five fallers of the day on a 0.02%
retreat to $0.4499. Eight counters recorded gains against five that faltered
to leave the market with a positive breadth of three.

Activity aggregates were depressed in the session as volumes traded
succumbed 41.29% to 929,100 shares while, value outturn fell 11.96% to 3.64m
shares. The top volume drivers of the day were Willdale {43.48%), Star
Africa (26.90%) and Ecocash (14.73%). The threesome of Delta, BAT and Econet
contributed a combined 66.82% of the total value traded. A total of 62,630
units exchanged hands in the session. Cass Saddle ETF and Datvest ETF added
14.29% and 0.13% to close at $0 .0080 and $0 .0199 respectively. Morgan and
Co Multi Sector ETF edged up 0.04% while, OMTI ETF shook off 0.45% to close
at $0.1095. The Tigere REIT advanced 0.74% to settle at $0.6397 while, the
Revitus REIT traded 2,200 units at an unchanged price of $0.2200 .

 <mailto:info at bulls.co.zw> 

Global Currencies & Equity Markets 

South Africa

South African Rand Weakens Amid Fed Rate Uncertainty

The South African rand weakened in early trade, dropping to 18.3750 against
the dollar – about 0.5% weaker than its previous close. This dip follows the
Federal Reserve’s meeting minutes hinting at enduring high interest rates in
the US.

What does this mean?

The Federal Reserve's meeting minutes, released on Wednesday, indicated it
might keep higher interest rates in the world's largest economy for the
foreseeable future. Some Fed members even supported the potential for more
rate hikes if necessary. This hawkish stance has spooked the risk-sensitive
rand, which is particularly attuned to global financial developments like US
monetary policy. Without significant local data releases to bolster the
currency, the rand's movement remains influenced by international cues.

Why should I care?

For markets: Navigating the ripple effects.

The Top-40 index and the broader all-share index of South Africa saw modest
gains of around 0.2% in early trade, showing some resilience in the equity
markets despite currency fluctuations. However, South Africa’s benchmark
2030 government 

bond

weakened, with its yield rising by 8 basis points to 10.370%. Meanwhile, the
dollar traded approximately 0.03% weaker against a basket of global
currencies, reflecting mixed sentiments across the board.

The bigger picture: Global sensitivities in focus.

Emerging market currencies like the South African rand are highly sensitive
to global financial developments, especially those related to US monetary
policy. The Fed's commitment to keeping interest rates high impacts not only
the rand but other similar currencies, leading to broader market
implications. As the world navigates through these uncertain financial
waters, US economic policies remain a key driver for global market dynamics.

Ghana

Cedi depreciation: GUTA president urges BoG to ease stringent money exchange
regulations

President of the Ghana Union of Traders Association (GUTA), has called on
the Bank of Ghana (BoG) to relax the stringent documentation requirements
businesses must follow to exchange money. 

Speaking on PM Express on JoyNews, Dr Joseph Obeng said the current
regulatory framework inadvertently drives more traders to engage with forex
bureaus and the black market rather than mainstream banks.

He noted that "one thing that the Bank of Ghana is doing is that they do not
recognise that we trade more with the forex bureaus and the black market
than the mainstream banks.

"Because you know, the fear factor there is the documentation, the
requirement, stringent documentation. They have to relax their stringent
documentation.”

“If you make a stringent documentation requirement, then people do not
transact through the banks. For the Bank of Ghana what you need is a bill of
lading and then your transactional value, that should be enough for you.
People will not be panicked about whatever the accounting aspect of all
that.”

Dr Obeng further argued that the core mandate of the central bank dealing
with businesses when it comes to foreign exchange should not be to do the
accounting for every transaction in detail. 

"Bring our document and all that is for GRA to do that. And they do
post-clearance audits, and all that, all the time. Yours is to track the
transactions that we do," Dr. Obeng stated.

The current regulatory environment has led to a significant volume of trade
being conducted in the black market rather than through formal banking
channels. 

"So Bank of Ghana is making a very serious mistake to the extent that
people, when they get money, instead of pushing it through the banks, they
just go and give it to the black market," he said.

Dr Obeng warned that the current situation causes the volume of trade to be
centred on the black market more than the banking sector, undermining the
effectiveness of the Bank of Ghana's monetary policies. 

"if you mention the bank rate is GH¢14.3, nobody is even excited because
they won't transact through there (banks). But then there are the black
market people who are detecting this pace, and we should know and observe
this," Dr. Obeng concluded.

This comes after the Ghana cedi weakened further against the US dollar and
other major foreign currencies as corporate demand soared in the past month.

But JoyBusiness reports that depreciation pressures on the cedi have slowed
down as a result of improved foreign exchange (FX) liquidity,

This, the report, attributed to a significant intervention by the Bank of
Ghana on the market last week, providing about $59 million on the spot
market and auctioning $20 million to the Bulk Oil Distribution Companies.

The move by the central bank marked the most significant support provided in
a week since the beginning of 2024.

 <mailto:info at bulls.co.zw> 

Global Markets

US Dollar Jumps Amid Strong Economic Data

The US dollar is poised for its biggest weekly gain in a month and a half,
fueled by strong economic data and a hawkish tone in recent Federal Reserve
minutes.

What does this mean?

Robust US business activity has powered the dollar's rise. Recent data
showed American business activity hitting its highest level in over two
years, with manufacturers reporting significant price surges across various
inputs. This economic strength has led the Federal Reserve to maintain a
hawkish stance, suggesting future 

interest

rate hikes could be on the table. As a result, the dollar has appreciated,
making waves in foreign exchange markets. The Australian dollar dropped 1.3%
to $0.6605, the New Zealand dollar fell 0.6% to $0.6098, and the euro slid
0.5% to $1.0814. The Japanese yen also weakened, approaching last month’s
22-year low against the euro.

Why should I care?

For markets: Dollar's strength reshapes currency landscape.

The US dollar's rally means investors are now rethinking their strategies.
Currencies like the Australian and New Zealand dollars have seen significant
declines. The Japanese yen’s notable weakening against both the dollar and
euro could affect exporters and global trade balances. Meanwhile, a steady
offshore Chinese yuan edging towards a weekly drop underscores the US
dollar’s influence on emerging markets too.

The bigger picture: Global economic shifts driven by US resilience.

The robust US economic data highlights contrasting performances among major
economies. While the US is experiencing a surge in business activity, other
regions are not faring as well, leading to depreciated currencies like the
euro and yen. This divergence can have broader implications for
international trade and investment, potentially shifting capital flows
towards the more buoyant US market.

 <mailto:info at bulls.co.zw> 

Commodities Markets

Gold price drops to week low on hawkish Fed, US data

Gold fell to a more than one-week low on Thursday as investors grew
apprehensive over US rate cut timings and on recent strength in US business
activity.

Spot gold was down 1.6% to $2,339.81 an ounce by 1:00 p.m. ET, extending its
decline for a third straight session. Three-month gold futures also dropped
2.1% to $2,342.60 ounce in New York.

The decline comes days after the spot price hit a record high of $2,449.89
on optimism over the Federal Reserve’s monetary policy.

Making bullion less attractive, US business activity accelerated to its
highest level in over two years in May, suggesting an uptick in economic
growth during the second quarter.

Still, the metal has gained 14% so far this year on anticipation of a Fed
rate cut coupled with rising geopolitical tensions around the globe.

Advancing dollar and a weakening US rate cut outlook have catalyzed a round
of profit-taking in gold, but the downside will be limited, said Daniel
Ghali, commodity strategist at TD Securities, in a Reuters note.

While the policy response for now would “involve maintaining” interest rates
at current levels, latest Fed minutes reflected discussions of possible
hikes.

“Investors that care about the Fed outlook actually aren’t all that long in
gold. They’ve missed the rally and in turn don’t have that much gold to
sell. So while we do think the gold prices are staging a correction here,
but that will be relatively shallow,” Ghali added.

UBS recently raised its gold price forecast to $2,600 for the end of 2024,
citing a series of softer US data for April, an upwardly revised central
bank demand for gold and ongoing geopolitical uncertainties.

Meanwhile, imports to India, the world’s second-biggest gold consumer, could
fall by nearly a fifth this year as high prices spur retail consumers to
exchange old jewelry for new items, according to an industry body.

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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