TANZANIA: IN October 2024, the Dar es Salaam Stock Exchange (DSE) witnessed a substantial surge in equity turnover, driven by significant block transactions involving Tanzania Breweries Limited (TBL) and CRDB Bank Plc (CRDB).
Equity turnover spiked 516 per cent month-over-month, escalating from 6.93bn/- in September 2024 to 42.70bn/-. Approximately 57.4 per cent of the October turnover, or 24.52bn/-, occurred in the final week, with six block transactions across four counters.
CRDB Bank Plc dominated trading activity, contributing 48.74 per cent of the total monthly turnover, with 30.83 million shares changing hands.
Notably, 16.84 million shares were traded in two block transactions in the last week, with prices ranging from 640/- to 670/- as CRDB’s share price appreciated following the release of its quarterly results.
TBL followed, accounting for 42.3 per cent of the turnover by moving 3.06 million shares, of which 1.67 million shares were traded in two block transactions during the last week.
The block transaction prices ranged between 5,800/- and 6,400/-, with TBL’s weighted average price for October at 6,025/-, a 45 per cent discount compared to its closing price of 10,900/-.
Foreign participation leaned heavily towards divestments, resulting in a net foreign outflow of 18.82bn/-($6.97 million).
This outflow is nearly four times the Q3-24 total net foreign outflow and represents 60 per cent of the cumulative net foreign outflow for the first nine months of 2024.
This follows a rare net foreign inflow in September 2024, triggered by the US Federal Reserve’s 50bps rate cut, which had initially raised hopes of renewed foreign portfolio investment (FPI) in the Tanzanian market.
The net inflow in September 2024 was the first monthly net inflow since April 2023. In October, foreign investors accounted for 47.7 per cent of divestments and only 3.63 per cent of investments, with domestic investors covering the balance.
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Despite elevated foreign divestments, the growing domestic investor base demonstrated resilience, absorbing substantial foreign withdrawals without disrupting equity prices or market capitalisation.
The Tanzania Share Index (TSI) edged up by 0.87 per cent in October, lifting domestic market capitalisation to 12.3tri/-.
Seven counters appreciated in price, counterbalancing losses in four others. Swissport Tanzania (SWISS) led with a 10.9 per cent price increase following its new agreement to provide ground and cargo handling services to Air France KLM Group at both Julius Nyerere International Airport (JNIA) and Kilimanjaro International Airport (KIA).
Despite competitive pressures in recent years, SWISS has maintained a market share above 90 per cent and is now pursuing growth by expanding into airport lounge services under its Aspire brand.
The airport lounge was established in 2022, costing the company approximately 520m/- in capital expenditure. The lounge turned profitable in 2023, albeit with a tight profit margin of less than 4 per cent. CRDB and NMB Bank followed, gaining 6.25 per cent and 1.89 per cent, respectively.
Their gains were attributed to robust quarterly financials showing double-digit profit growth-CRDB at 45 per cent and NMB at 19 per cent.
Both banks reported strong credit demand, outpacing deposit mobilisation and leading to rising interest expenses relative to interest income.
Afriprise Investment Company (AFRIPRISE) gained 4.35 per cent in anticipation of its annual general meeting and dividend payout scheduled for November 2024.
DCB Commercial Bank (DCB) and TOL Gases (TOL) also saw gains, rising by 3.13 per cent and 3.08 per cent, respectively.
DCB has experienced price volatility throughout the year, recording a year-todate appreciation of 26.92 per cent, while TOL’s Q2-24 results reflected a 3.6 per cent increase in H1-24 net profit due to improved accessory sales.
Tanga Cement Plc (TCCL) saw a modest 1.04 per cent price increase, supported by ongoing expectations of a retail shareholder offer from Scancem International D.A., with a speculated offer price of 2,273/- guided by the settlement between Scance and Afrisam.
However, Twiga Cement Plc (TPCC) was the month’s biggest loser, dropping 7.81 per cent due to reduced profitability in Q1-24 and limited production capacity.
TPCC expects a production boost from TCCL’s acquisition, which could expand capacity by 1.3 million tonnes and drive top-line growth.
Other decliners included Mkombozi Bank (MKCB, -3.57 per cent), National Investment Company (NICOL, -2.67 per cent) and Dar es Salaam Stock Exchange (DSE, -1.63 per cent).
MKCB’s drop, despite 49 per cent growth in pre-tax profits, may be attributed to a non-performing loan (NPL) ratio of 5 per cent and a costto-income ratio of 55 per cent, both at the regulatory limit impacting dividend payouts.
November 2024 is expected to bring significant global economic and geopolitical events. The US presidential election is anticipated to influence market sentiment, given the stark policy differences between candidates.
Additionally, the Federal Open Market Committee (FOMC) is set to meet on November 7, with markets speculating on another rate cut as the US economy shows signs of a soft landing from recent inflationary pressures and monetary tightening.
An additional rate cut could ease foreign exchange pressures in developing economies and potentially reverse the FPI outflows.
