COLUMN: FINANCIAL MARKETS DIGEST. Equity turnover surges, market still tight

THE Tanzanian capital markets registered a dramatic escalation in activity during the week ending June 20th, 2025, with total equity turnover surging more than twofold to 31.27bn/-.

This substantial increase in liquidity, stemming from a total volume of 38,748,187 shares traded, was driven by a single, highly concentrated event that has significant implications for interpreting the market’s underlying health. While headline figures suggest a tidal wave of new capital, a deeper analysis reveals a more nuanced picture of both concentrated positioning and broadening participation.

The week’s turnover was overwhelmingly dominated by CRDB Bank Plc, which posted a staggering weekly turnover of 27.62bn/-. This figure, accounting for 88.35 per cent of the market’s total turnover was principally the result of a pre-arranged block trade of 30,000,000 shares executed on Friday.

Such a transaction, while inflating aggregate statistics, is more indicative of a strategic repositioning by institutional holders than a broad-based shift in market sentiment. When this outlier event is analytically isolated, the remaining 11.65 per cent of the week’s turnover presents a healthier, more diversified composition.

The top five most active counters: CRDB, VODA, TCC, JHL, and KCB, collectively accounted for 97.31 per cent of turnover, while the remaining 15 active counters comprised the balance. This underlying activity, dispersed across a wider range of securities, points to a fundamentally vibrant market structure, suggesting that liquidity and investor interest are not solely confined to a few bellwether names.

The week’s performance narrative was one of clear divergence. The gainers’ list was led by the cross-listed counter, Jubilee Holdings Ltd (JHL), which appreciated by an impressive 8.06 per cent, likely benefiting from regional fund flows and a valuation arbitrage opportunity recognised by investors across East Africa.

Among domestic counters, the gains were more modest and selective, with DCB Bank (+3.70 per cent) and Mkombozi Commercial Bank (+2.97 per cent) continuing to attract value-oriented investors.

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The marginal gains in TPCC (+1.06 per cent) and NMB (+0.76 per cent) suggest a consolidation phase for these large-cap names following recent volatility. On the other side of the ledger, a significant price correction was observed in Maendeleo Bank Plc (MCB), which saw its share price decline by 10.71 per cent to 250/-.

This was followed by a cohort of other notable counters experiencing negative repricing, including TCCL (-5.91 per cent), VODA (-5.77 per cent), Kenya Airways (-5.26 per cent), and NICO (-4.17 per cent). This broad-based decline across multiple sectors indicates a potential risk-off rotation as the dividend season concludes and investors recalibrate their portfolios based on forwardlooking fundamentals rather than short-term yield capture. Of note is the apparent price stabilisation of the Dar es Salaam Stock Exchange (DSE) counter.

As the market approaches the company’s Annual General Meeting on June 25th and the ex-dividend date on June 26th, uncertainty appears to be subsiding, allowing the stock to find a near-term equilibrium. The primary fixed income market was my focal point of the week, with the auction of a 20-year Treasury bond on June 18th.

The paper, carrying a 15.25 per cent coupon, attracted significant demand, settling at a Weighted Average Yield to Maturity (WAY) of 14.50 per cent. The Weighted Average Price was 105.2582, with a minimum successful price of 104.7823, confirming the market’s deep appetite for duration, albeit at yields lower than many participants may have sought .

In the secondary market, however, turnover contracted by 40.06 per cent week-onweek to 147.33bn/-, suggesting a period of market consolidation and position-taking following the auction. The most traded instruments were the 20-year government bonds (15.49 per cent coupon), which saw 65.29bn/- in face value change hands at an average yield of 14.48 per cent.

The continued, albeit small, participation from corporate bonds, including the CRDB SAMIA Bond, NBC, and NMB issues, remains a structurally positive sign for the diversification of domestic credit markets. My attention now pivots to the final Treasury bond auction of the fiscal year: a 15-year paper scheduled for June 25th.

This event represents a critical juncture. On one side are market participants grappling with interbank lending rates (IBCM) pressing the 8.0 per cent upper bound of the policy corridor, signalling a demand for higher returns. On the other is the Bank of Tanzania, which has demonstrated clear resolve in its campaign of yield compression, evidenced by its successful guidance of the 20-year and 25-year auction outcomes.

The prevailing logic suggests that if investors were unable to win the “tug of war” with the central bank on longer-duration instruments, their leverage is unlikely to increase for a 15-year paper. I therefore anticipate that the downward trend in yields will be maintained.

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As the market transitions away from the event-driven dividend season, equity valuations will increasingly be dictated by fundamentals, while the dynamics in the fixed income space will be dictated by this ongoing policy-investor tension.

The current yield environment, particularly in government securities, may soon be viewed as a “missed golden moment” should the central bank’s policy path hold firm, creating a strategic window for investors to lock in what may be the highest available yields for the foreseeable future.