Tanzania leads continental stock rally

DAR ES SALAAM: TANZANIA remained the topperforming equity market in Africa in local currency terms, extending its year-to-date gains to 40.65 per cent as investor appetite stayed firm across the continent.

The strong showing helped anchor a broadly positive week for African equities, with West and East African markets recording particularly robust momentum.

“Overall, the performance underscores sustained interest in African equities, led by Tanzania and West Africa, even as some markets paused after strong earlier gains,” African Markets newsletter said yesterday.

Beyond Tanzania, according to African Markets newsletter, gains were pronounced in West Africa, where Ghana surged 15.06 per cent over the week, lifting its year-to-date performance to 34.61 per cent, while Nigeria advanced 6.95 per cent, pushing its annual gains to 25.30 per cent in local currency and 34.39 per cent in US dollar terms.

Uganda also posted a weekly gain of 4.32 per cent. In contrast, Kenya retreated by 3.14 per cent amid profittaking in major counters, while Botswana, Malawi and Zimbabwe closed lower.

Elsewhere, currency effects continued to shape returns, with Zambia’s modest 1.70 per cent year-to-date gain in local terms translating into a 19.53 per cent rise in US dollar terms following the appreciation of the kwacha.

At the stock level, the week was marked by sharp price movements, particularly among financial and mid-cap names in Nigeria and Ghana, while macro developments, ratings actions, and market reforms across Southern and North Africa provided further support to investor sentiment.

Tanzania’s Zan Securities Advisory and Research Manager, Isaac Lubeja, said yesterday the equity market at the Dar es Salaam Stock Exchange (DSE) closed last week on a notably strong footing, supported by a sharp rise in turnover and sustained buying interest in banking counters.

“This momentum reflects strong earnings expectations and continued confidence in tier-one banks,” Mr Lubeja said.

However, after the sharp appreciation seen in several banking counters last week, some degree of short-term profit-taking is likely.

“While the broader trend remains constructive, price movements may become more measured in the coming sessions as the market digests recent gains,” he said.

The DSEI advanced by 3.4 per cent to 3,884.55 points, while the TSI gained 4.14 per cent to close at 8,770.10 points.

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This upward movement was accompanied by a 70.5 per cent week-on-week surge in turnover to 87.8bn/-, signalling renewed investor conviction and improved liquidity conditions in the market.

“Market activity remained heavily concentrated in the banking sector,” Mr Lubeja said.

The Bank, Finance and Investment Index rose by 7.77 per cent, clearly outperforming other sectors.

Outside the banking space, performance was more subdued. The Industrial and Allied Index declined slightly, and the Commercial Services Index recorded a more pronounced pullback.

Counters such as Tanzania Breweries Limited, Tanzania Cigarette Company and Vodacom Tanzania Plc underperformed relative to banks.

This divergence raises the possibility of sector rotation in the weeks ahead, particularly if valuations in the banking sector begin to stretch.

“Should liquidity remain elevated, investors may gradually reallocate capital toward defensive and consumer-oriented stocks that have lagged behind,” he said: “Overall, the equities market appears positioned to remain positive, albeit more selective, with leadership likely to stay in banking stocks while volatility increases in recently overheated counters”.

Tanzania’s Alpha Capital Chief Executive Gerase Kamugisha told the ‘Daily News’ yesterday that that Tanzania’s capital markets have demonstrated a remarkably strong start to the year.

“The market (DSE) recorded a sharp rebound in equity trading activity, rising market capitalisation and sustained investor demand for government securities throughout the month,” Mr Kamugisha said.

According to the January market data, total equity turnover surged to 189.75bn/-, up from 55.42bn/- last January, a remarkable 242 per cent month-on-month increase.

Compared to last January, the turnover expanded by an even more striking 576 per cent, underscoring a substantial improvement in trading depth and participation.

“The recovery follows the typically subdued yearend trading period and reflects stronger institutional participation, improved domestic liquidity and renewed investor risk appetite,” Mr Kamugisha said.

Market analysts attribute this structural repricing to improved corporate earnings, particularly within the banking sector, stable macroeconomic conditions, and relatively attractive equity valuations compared to fixedincome instruments.

The broad participation indicates strengthening investor confidence rather than shortterm speculative trading.