Bulls n Bears Daily Market Commentary : 10 September 2024

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Bulls n Bears Daily Market Commentary : 10 September 2024

 

 	



 

 	


ZSE commentary 

 

Heavies Heavyweight gains support ZSE's advance in dull session

HARARE - Zimbabwe Stock Exchange closed Tuesday's trades significantly
higher after select heavyweight gains provided support in a market which
continues to lack strong liquidity momentum.

The All Share Index jumped 6.65% to 216.41 in a session which yielded 12
gainers and six losers, the majority of which had losses below 1%.  Turnover
was at ZWG6.65 million from the sale of 3.25 million shares.

OK Zimbabwe led in both volume and value after 2.23 million shares worth
ZWG2 million exchanged hands.  Trades were subdued at just 134 while
foreigners were net sellers albeit just narrowly at ZWG779 199 against
purchases of ZWG610 392.50.

 

The Top Ten Index was the strongest link with an 8.86% gain to 231.44. FBC
hit limit up to 753.80c and Delta rose 11.76% to 1 580.44c taking its market
cap to US$1.58 billion using the official exchange rate.

Stock of interest, NMB was 14.98% higher to 224.55c but on lesser volume
than seen in Monday's session when a key shareholder was restructuring his
portfolio.  CBZ put on 9.88% to 1099.57c in the wake of its interim results
where the group reported a drop in earnings.

Econet advanced 7.58% to 400c while on the opposite end EcoCash pared 1.54%
to 75.57c  

 

The Medium Cap Index added 1.23% to 169.55. Willdale led the day's risers
with a 15.74% gain to 4.40c, Star Africa added 14.55% to 1.26c and stock to
watch ART Holdings rose 13.15% with a year to date gain of 319%.

Proplastics fell the most at 14.58% to 169c. The company recently saw
significant changes to its shareholding structure.  There were marginal
losses in Tanganda, ZHL and RTG.

The Tigere REIT put on 4.6% to 100.39c while Revitus REIT was flat at 85.25c
in a low volume trade. In its maiden results for the June interim period,
Revitus reported a total comprehensive income of $184,619 for the period,
significantly outperforming its half-year profit budget by 36%. Gross rental
income was at US$432 124 with a rental yield of 2.97%. The average
collection ratio improved to 79% in the second quarter, up from 69% in the
first quarter. Revitus declared a Q2 dividend of $48,134, translating to
0.0131 United States cents per unit.

Turnover on the VFEX was relatively fair at US$110 962, with the bulk of it
coming from Innscor at US$102 623. The All Share Index put on 0.70% to
106.65.

First Capital Bank was the day's top riser after gaining 5.77% to 5.50 US
cents ahead of its interim dividend payment.  Seed Co International was
3.81% higher to 21.80 US cents and Innscor put on 1.64% to 45.75 US cents
ahead of the release of its full year results.

Edgars was the worst performer, losing 18.37% to 1.60 US cents taking its
market cap to US$9.76 million. There were fractional losses in Axia, Simbisa
and National Foods. The milling company recently issued a cautionary
statement over a pending transaction. The company is set to delist from the
VFEX and will do an offer to minorities.-finx

 

 

 <mailto:info at bulls.co.zw> 

 

 

Global Currencies & Equity 

 

South Africa

 

Rand in 3rd place among EM currencies against the dollar

The rand remains one of only five emerging market (EM) currencies out of a
total of 23 that has been trading stronger against the dollar in the year to
date With election season winding down, Citadel Global weighs in on the
impact on the currency landscape and how market dynamics could play in the
rand's favour for the rest of 2024:

 

The rand is expected to perform well for the remainder of the year, with
estimates for the end of the year ranging from R17,80 to R18,30 to the US
dollar, according to currency expert Bianca Botes, director at Citadel
Global.

 

"The rand remains one of only five emerging market (EM) currencies out of a
total of 23 that has been trading stronger against the dollar in the year to
date, having ranked third on the list during the past month.

 

"The relatively strong rand-to-dollar exchange rate range we foresee for the
end of 2024 depends on certain variables and assumptions used, however, we
believe there is room for the rand to gain even more ground - to end off the
year much stronger than these levels if a few things work in the favour of
the EM basket of currencies," says Botes.

 

Explaining some of the factors influencing the relative strength of the
rand, she says: "Yes, the formation of the Government of National Unity
(GNU) was seen as positive by market participants and assisted in the
unwinding of some risk premia that was priced into the rand.

 

"We have also seen some positive policy come to the fore. In the longer
term, the rand will however take its cues from global events, specifically
the dollar performance and announcements by the US Federal Reserve. The
softer dollar is supportive of the rand."

 

Botes says it is important to note that the rand's relative strength cannot
be attributed only to South African factors. "Locally we still need to see
if the current state of electricity in the country can be sustained, that
logistical matters such as Transnet can be resolved, and that further
reforms can create a business-friendly environment to stimulate growth and
employment.

 

"From a more holistic perspective, you need a risk-on environment and rising
commodity prices for EM currencies - and especially those which are
commodity driven such as the rand - to benefit."

 

A look at global factors influencing the rand:

 

"Risk sentiment has flipflopped throughout the year, and when we see a risk
appetite in the global sphere turn positive, the rand typically benefits
from the yield-seeking behaviour."

 

Botes says one of the most important factors influencing the rand is still
the strength of the US economy, and the hopefully soon-to-change
interest-rate cutting cycle of the US Fed that markets have been
anticipating since the beginning of the year. "Specific events, such as the
upcoming US election are sure to cause some volatility in the market."

 

A recap of SA's challenges - and a glimmer of hope:

 

"South Africa's economic landscape was bleak for the better part of a
decade. Gross Domestic Product (GDP) growth has averaged less than 1% per
year, plagued by logistical challenges, crime, corruption, and gross
mismanagement. The energy crisis eroded investor confidence and the
political scene was equally troubling, leading to a loss of public trust.
However, the formation of the GNU has so far exceeded expectations and
offers some hope," says Botes.

 

Since the new government's formation, bond yields have fallen dramatically,
the Johannesburg Stock Exchange (JSE) has gained notable ground, and the
rand has appreciated against the dollar - all signalling renewed investor
optimism for South Africa, she says.

 

Reforms that offer hope include stabilisation of the energy supply, fiscal
reform and discipline, greater private-sector collaboration efforts from the
government, and an apparent surge in investment.

 

"These developments could mark the beginning of a sustained period of growth
for South Africa.

 

"If the GNU can maintain cohesion and implement necessary reforms, the
country could see a significant improvement in its economic performance over
the coming years. This would not only enhance the standard of living for
South Africans but also position the country as a more attractive
destination for foreign investment.

 

 

Nigeria

 

Naira faces pressure in black Market, Trades at N1,635/$

The dollar index remained near its weekly high, while the Nigerian naira
fell below a key support line. The local currency dropped below the N1,600/$
support level in the black market.

 

Market fundamentals indicate renewed demand pressure and an expanding supply
gap, leading to another round of naira depreciation.

 

The naira's value fell from N1,625 per dollar last weekend to N1,635/$
yesterday.

 

The local currency is under severe pressure this month, struggling to
maintain the critical N1,500 support level, according to market indicators,
despite slight improvements in some macroeconomic conditions in the Nigerian
foreign exchange market.

 

Fundamentals suggest that if the local currency cannot maintain its current
levels, it may decline towards N1,800/$. Even ardent supporters of free
market economics may now doubt that the naira will strengthen to its March
highs this quarter.

 

The Central Bank of Nigeria plans to issue treasury bills valued at N2.2
trillion in the fourth quarter of 2024. This substantial issuance, a direct
response to the nation's current economic difficulties, aims to stabilize
the naira while managing liquidity in the financial market.

 

In response to soaring inflation, the Nigerian apex bank has adopted a tight
monetary policy, raising interest rates on treasury notes to provide more
incentives in the Nigerian capital market. The interest rates on 364-day
bills increased from approximately 15-18% at the end of 2023 to 21.49% in
the first half of 2024.

 

U.S. Dollar Index Hits Two-Week High

 

The dollar strengthened to its highest level since August 20, driven by
rising long-term Treasury rates and inflation data indicating a smaller rate
cut. The dollar index consolidated around 101.67 index points after reaching
a peak of 101.79, a level not seen since August 20.

 

For the first time since July 2023, it fell as low as 100.51 index points
last week following Fed Chair Powell's statement that the easing campaign
would begin at the next policy meeting. Data on U.S. gross domestic product
also suggested that the economy is strong enough to allow the Federal
Reserve to be less aggressive in loosening policy.

 

Currently, traders fully price in a quarter-point reduction in the Fed rate,
with a 33% chance of a 50-basis point cut this month. Expectations for a
larger decline were 36% a week ago.

 

U.S. payroll data, due on Friday, will be significant as Federal Reserve
Chair Jerome Powell has shifted from combating inflation to preparing to
protect against job losses. Analysts believe the employment data will
influence the extent of the expected rate cut by the Federal Reserve.
Markets have already been pricing in a 25-basis point cut for weeks.

 

 

 

 <mailto:info at bulls.co.zw> 

 

Global Markets

 

 

US dollar falls as markets brace for presidential debate, inflation

(Reuters) - The dollar slid against some major currencies on Tuesday,
consolidating Monday's gains ahead of key inflation data and a highly
anticipated U.S. presidential debate, even though neither outcome is likely
to affect overall monetary policy.

Safe-haven currencies such as the yen and Swiss franc also gained amid a
rout in bank shares, analysts said, after the Federal Reserve's regulatory
chief on Tuesday outlined a plan to raise big banks' capital by 9%. That
disappointed bank investors and some critics of the rule. The S&P 500 banks
index (.SPXBK), opens new tab fell 2.7% to 408.2, after earlier falling to a
one-month low.

 

The Federal Reserve is widely expected to cut interest rates next week for
the first time in more than four years. What is still up for debate, though,
is the size of the rate cut. Fed funds futures have priced in a 67% chance
of a 25 basis point (bp) cut at the Sept. 17-18 policy meeting, and a 33%
probability the Fed might do 50 bps, according to LSEG calculations.

The odds on the 50-bp cut rose as high as 50% last Friday after a mixed U.S.
labor report.

"The general theme is consolidation. If you look at the one-month chart of
the dollar index, we're basically in the middle of the range," said Eugene
Epstein, head of structured products, North America at Moneycorp in New
York.

 

"So we have been grinding higher from the lows in late August and the driver
of that has been mainly on the rates front. The market had pretty high
expectations on the Fed cut next week ... but some of those expectations
have been dialed back," he added.

Reuters Graphics

Investors will still be looking at the U.S. consumer price index report for
August due for release on Wednesday. The Fed, however, has indicated that it
is focused less on inflation and more on employment and remained confident
that U.S. inflation is on a downward trajectory.

The headline U.S. CPI is expected to have risen 0.2% on a month-on-month
basis in August, according to a Reuters poll, unchanged from the previous
month. However, on a year-on-year basis, it is seen to have gained just
2.6%, down from 2.9% in July.

In afternoon trading, the dollar fell 0.5% against the yen to 142.35 yen ,
not far from the one-month low of 141.75 touched on Friday. The greenback
fell 2.7% last week against the yen.

Analysts do not expect the Bank of Japan to raise rates or to provide
decisive guidance when it meets on Friday next week.

Against the Swiss franc, the dollar slid 0.3% to 0.8466 franc .

The drop in oil prices added to global jitters, pushing the yen and Swiss
franc higher, analysts said. Global oil benchmark Brent crude futures
settled at their lowest since December 2021 on Tuesday, after OPEC+ revised
down its demand forecast for this year and 2025, offsetting supply concerns
from Tropical Storm Francine.

Meanwhile, the euro slipped 0.1% to $1.1024.

Investors are watching Europe's political backdrop, citing the stalemate in
France and heightened uncertainty across the EU after German regional
elections.

The spotlight though will be on the messaging from the European Central Bank
on Thursday after its policy meeting. Traders are pricing in 63 bps of ECB
easing this year.

The dollar index, a gauge of the greenback's value against six major
currencies, was flat to slightly lower at 101.63 . So far this year, the
dollar index was up 0.1%.

Investor focus will also be on the televised U.S. presidential debate
between Republican nominee Donald Trump and his rival, Democratic Vice
President Kamala Harris, later on Tuesday that could weigh heavily on the
November election.

Investors see the greenback rising in the event of a Trump victory, as
tariffs might prop up the currency and higher fiscal spending could boost
interest rates.

The pound, meanwhile, rose after UK data showed robust employment growth. It
was last up 0.1% at $1.3081 .

In China, the country's imports missed forecasts and grew just 0.5%. That
followed Monday's lower-than-expected inflation data, highlighting still
weak domestic demand.

China's yuan eased slightly versus the dollar, which rose 0.1% to 7.1193,
with losses capped by better-than-expected export data.

 

 

 

 <mailto:info at bulls.co.zw> 

 

 

 

 

Commodities Markets

 

Gold holds firm above $2,500 level as US inflation data looms

 

(Reuters) - Gold prices held firm above the $2,500 level on Tuesday as
market participants positioned themselves ahead of U.S. inflation data for
further clues on the depth of interest rate cuts by the Federal Reserve next
week.

Spot gold rose 0.3% to $2,512.38 per ounce by 14:03 p.m. ET (1803 GMT). U.S.
gold futures settled 0.4% higher at $2,543.1.

 

"Gold prices are trading in an extremely tight range, waiting for the next
catalyst, which are likely to be both the U.S. presidential debate tonight,
followed shortly by inflation data tomorrow," said Daniel Ghali, commodity
strategist at TD Securities.

Investors will closely scan through U.S. Consumer Price Index data on
Wednesday and the Producer Price Index reading on Thursday.

 

The CPI for August is expected to have risen by 0.2% month-over-month,
unchanged from the previous month, according to a Reuters poll.

"Spot gold remains supported above the psychological $2,500 level, and any
post-CPI forays below that big, round number should see bulls buying the dip
once more, as they have consistently done since mid-August," said Han Tan,
chief market analyst at Exinity Group.

So far this year, gold has gained 21%, hitting an all-time high of $2,531.60
on Aug. 20.

Lower interest rates reduce the opportunity cost of holding zero-yield
bullion.

 

Markets are currently pricing in a 67% chance of a 25-basis-point U.S. rate
cut at the Fed's Sept. 17-18 meeting, and a 33% chance of a 50-bps cut, the
CME FedWatch tool showed.

Spot silver fell 0.3% to $28.26 per ounce.

 

Platinum gained 0.2% to $939.71 and palladium was up by 2.1% to $966.55.

The World Platinum Investment Council said the global platinum deficit in
2024 will be twice as high as previously expected due to inflows to exchange
traded funds and purchases of large bars in China.

"We remain convinced that the platinum price has considerable upside
potential," Commerzbank said in a note.

 

 

 

 


 

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 

 

 

 Invest Cellphone:            +263 71 944 1674 | +27 79 993 5557 

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Skype:         Bulls.Bears 



 

 

 	

 

 

 	

DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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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
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