Block trading pushes DSE activities

The DSE equity market enjoyed an active trading week. Total turnover registered amounted to 3.926bn/- an increase of 113 per cent compared to the preceding week.

The hefty turnover figure was attributed to a number of pre-arranged block trades such as;

24th August: TCC 80,000 shares at 5,000/- per share; 25th August: TCC 45,000 shares at 5,000/- per share; 25th August: CRDB 2,800,000 shares at 400/- per share; 26th August: NMB 328,000 shares at 2,800/- per share; 26th August: Swissport 550,000 shares at 1,800/- per share.

Top trading counters this week were CRDB, Swiss and NMB dominating the overall market turnover figure by 31.63 percent, 25.36 percent and 24.65 percent respectively.

Price movement was recorded on six domestic traded equities this week. DSE appreciated the most, registering a 9 per cent upside closing the week at 2,180/- per share. TCCL/SIMBA registered a 6.58 per cent upside closing the week at TZS 1,620 per share; NICO continues its rally appreciating by 2.86 per cent closing at 360/- per share.

On the losers TPCC had a slight sell-off this week depreciating by 2.05 percent to close at 3,820/- per share, Swiss ended its bullish run loosing 3.06 per cent of its value closing the week at 1,900/- per share, lastly TOL lost 7.14 per cent seeing the trading week off at 650/-.

Total market capitalization went down by 1.56 per cent to

15.792tri/- and domestic market capitalization went down by 0.08 per cent closing at 10.285tri/-.

Key benchmark indices

 Tanzania share index (TSI) closed at 3,890.9 points decreasing by 0.08 percent.

 All Share Index (DSEI) decreased by 1.56 percent to close at 1,894.89 points.

Sector Indices

 Industrial & Allied Index (IA) closed at 5,068.98 points, down by 0.19 per cent.

 Bank, Finance & Investment Index closed at 3,299.2 points, up by 0.19 per cent.

 Commercial Services Index closed at 2,172.16 points, down by 0.12 per cent.

Market news

Inflation

The National Bureau of Statistics released Inflation numbers for July whereby, the Annual Headline Inflation Rate for the month of July, 2022 has increased to 4.5 per cent from 4.4 per cent recorded in June, 2022.

The increase of headline inflation explains that, the speed of price change for commodities for the 12 month period ending July, 2022 has increased compared to the speed recorded for the 12 month period ending June, 2022. The overall index went up from 104.32 recorded in July, 2021 to 109.05 in July, 2022.

Monetary tightening

The Monetary Policy Committee (MPC) held its 221st Meeting on 5th August 2022 to assess the conduct of monetary policy in May and June 2022 and economic performance. The MPC approved the Bank of Tanzania to reduce the speed of expanding liquidity in the remainder of 2022, in order to tame inflationary pressures from the demand side, while safeguarding the growth of the economy.

Key highlights

Debt market

On Wednesday 24th August 2022, the central bank offered 77.2bn/- for the 364-day Treasury bill while 37.3bn/- was offered for the 182-day maturity. It also offered 10bn/-and 5.0bn/- for 35-day and 91-day maturities respectively.

Yield of the 35-day fell by 62 basis points when compared to the last auction. Yield of the 182-day gained 148 basis points when compared to the last auction. Yield of the 364-day fell by 19 basis points in contrast to the last auction.

This drop in yields for the 35-day and 364-day Treasury bills informs us that the demand is high in the market investors are willing to pay a higher price for these particular short-term, relatively low-risk instruments.

The yield for the 182-day Treasury bill however has increased when compared to the last auction up to three months ago. This means that it has now become cheaper to invest in such instruments in the primary market, as the price has dropped.

Key highlights

Secondary market

The trading week ending August 26 was a short one, as Tuesday was a public holiday. Consequentially value of secondary market trades came in low.

The trading week was characterized by a sustained preference for long-term papers. Tenures traded were predominately on the long end such as the 15year, 20year and 25year.

Number of trades slightly increased from 40 trades recorded in the previous trading week to 42 trades in the trading week ending August 26.

However, value of bonds traded registered another weekly fall of 65 per cent from 33.8bn/- recorded in the previous week to 11.75bn/-.

Outlook

Amidst rising global and local inflation, investors are being pushed to seek better real returns to compensate for inflation risk, which has resulted to an exodus to the equity market. Overall the domestic equity market continues to form resilience from rising commodity prices.

Half year reports released by a number of listed companies show signs of growing profits with more cautious approach to costs. To reflect this growth the domestic index (TSI) has gained 9.14 per cent respectively year to date.

DSE, CRDB, Swiss, TOL, and NMB experienced the largest gains year to date dragging up activity and turnover at the bourse.

However, we expect moments of plateau growth primarily due to monetary tightening by the central bank.

Mr Masumbuko is a Chief Executive Officer of Zan Securities—a capital markets and securities authority licensed dealer and a member of the DSE. raphael.masumbuko@zansec.co.tz