Banking stocks set to extend DSE rally

DAR ES SALAAM: BANKING and industrial stocks are poised to lead the next phase of gains on the Dar es Salaam Stock Exchange (DSE), as abundant liquidity, easing bond yields and rising investor confidence reinforce demand for equities despite continued foreign selling.

Market analysts say improving corporate earnings, attractive dividend prospects and a stable macroeconomic environment are encouraging both institutional and retail investors to increase exposure to listed companies, extending a rally that gathered pace during the first half of the year.

The bullish outlook comes after another week of strong trading activity. Total market turnover rose 10.75 per cent to 177.04bn/- in the week ended July 17, from 159.86bn/- a week earlier, while trading volumes climbed 8.18 per cent to 63.87 million shares, signalling improving liquidity and sustained investor participation.

Although foreign investors remained net sellers, the outflow narrowed sharply to 4.17bn/-, compared with 137.58bn/- in the previous week, indicating that external selling pressure is gradually easing.

Zan Securities Advisory and Research Manager, Mr Isaac Lubeja said the market’s positive momentum is underpinned by strong domestic liquidity and increasing participation from institutional investors.

“The outlook for the coming weeks remains constructive, supported by robust domestic liquidity, improving investor confidence and continued strength in the country’s capital markets,” Lubeja said in his weekly market review.

He said trading during the week was dominated by CRDB Bank shares but expects investor activity to broaden as fund managers rotate into fundamentally strong banking and industrial counters that have yet to fully reflect the market’s recent gains.

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According to Lubeja, banking stocks remain among the market’s most attractive investments because of resilient earnings, strong dividend prospects and relatively attractive valuations.

Selected industrial companies are also expected to benefit from growing investor demand due to their pricing power and consistent cash generation.

He added that strong demand for Treasury bills and declining yields suggest liquidity remains plentiful within the financial system, prompting investors seeking higher returns to shift more capital into dividend-paying equities.

Alpha Capital Chief Executive Officer Gerase Kamugisha said Tanzania’s capital market continues to benefit from solid economic fundamentals despite uncertainties in global financial markets.

He said sustained policy support, continued investor education and broader investment products are helping transform the DSE into a deeper and more sophisticated market capable of mobilising long-term capital for economic growth.

Analysts expect continued participation by local institutional investors and favourable macroeconomic conditions to support the exchange in the coming weeks, with banking and industrial shares likely to remain the main drivers of market performance.