DSE stock trading cools as investors rush to govt bonds

DAR ES SALAAM: TRADING on the Dar es Salaam Stock Exchange (DSE) slowed down last week as stock values dipped, but investor appetite for government bonds surged to record levels.

While company share sales slowed down by over 13 per cent, government bond auctions saw overwhelming demand with one five-year bond receiving nearly three times the amount of money requested.

According to Zan Securities Limited’s Weekly WrapUp, investor focus this week is expected to centre on whether buying interest in selected equities will persist, alongside continued strong demand for government securities and momentum in the fixed-income market.

The Advisory and Research Manager at Zan Securities, Mr Isaac Lubeja, said the broader equity market appeared to be taking a breather rather than undergoing a sharp reversal, with the DSE All Share Index (DSEI), Tanzania Share Index (TSI), Industrial and Allied, and Bank, Finance and Investment indices all recording declines last week.

The Commercial Services index, however, jumped 9.22 per cent, while Afriprise and Vodacom led individual gainers, rising 22.31 per cent and 9.91 per cent, respectively.

Mr Lubeja said continued buying interest in this week would indicate whether recent gains represented sustained repricing, while a decline in demand could point to a shortterm rise.

Mr Lubeja also identified dividend-driven activity as a potential market theme, particularly following Mkombozi Bank’s planned dividend of 100/- per share, equivalent to 2.4bn/- in total.

The bank’s dividend case is supported by balance-sheet growth, with deposits rising by 27 per cent, loans by 10 per cent and assets by 31 per cent, according to the report.

On the fixed-income market, Mr Lubeja said demand for government securities continued to strengthen, with the reopened five-year Treasury bond attracting a subscription rate of 278.31 per cent, compared with 164.05 per cent at the previous reopening.

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The offer size was reduced to 142.72bn/-, while the bond yield declined to 9.53 per cent from 9.54 per cent previously.

He said reduced supply and stronger demand could result in aggressive bidding at upcoming primary auctions, with unmet demand potentially spilling into the secondary market.

Meanwhile, Alpha Capital Chief Executive Officer Mr Gerase Kamugisha said DSE trading activity moderated last week with equity turnover and market indices declining while fixed-income activity strengthened.

According to Alpha Capital’s latest weekly market report, equity turnover stood at 53.05bn/-, down 13.12 per cent from the previous week, while shares traded declined by 8.92 per cent to 24.60 million.

Overall market capitalisation fell 1.20 per cent to 40.12tri/-, while domestic market capitalisation declined 2.25 per cent to 27.64tri/-.

The DSEI closed at 4,602.26 points, while the TSI fell 2.25 per cent to 10,166.24 points. Domestic investors remained dominant, accounting for 75.73 per cent of equity sales, compared with 24.27 per cent for foreign investors.

On the buying side, Tanzanian investors accounted for 86.15 per cent. In the secondary bond market, turnover rebounded 28.43 per cent to 104.06bn/- despite a 33.59 per cent decline in the number of trades.

Average trade size nearly doubled to 1.20bn/-, pointing to increased activity in larger institutional transactions.

Zan Securities said the trend could continue supporting demand for long-dated government securities, particularly 10-, 15- and 20-year Treasury bonds, with inflation at 4.3 per cent helping sustain the attractiveness of real yields.