Bond demand soars as CRDB cools

E QUITY market activity slowed sharply in the week ending 22 August 2025, signaling a marked change in investor behaviour after several weeks of steady rallies.

Turnover fell dramatically to 9.38bn/-, down 74 per cent from the prior week’s 36.89bn/-, while the number of shares traded declined 63.75 per cent. Both the All-Share Index and the Tanzania Share Index mirrored this cooling, losing 20.16 and 65.27 points respectively.

The correction, while steep, is not unusual in a market that had been overheated, investors who had benefited from the run-up appear to have stepped back, locking in gains and triggering profit-taking across the board, hence the sharp reversal in sentiment and momentum shifting from aggressive buying to defensive selling.

Looking at the top movers, CRDB and TBL, both heavyweights in recent weeks, posted substantial declines in trading activity. CRDB registered a turnover of 2.97bn/- and TBL 1.658bn/-, down from the previous week’s 23.72bn/- and 8.674bn/- respectively.

Together with NMB (1.86bn/-), DCB (999.9m/-) and KCB (619.55m/-), these counters still formed the top five movers for the week. Yet, unlike the past several weeks where liquidity had been tightly concentrated in CRDB and TBL, the distribution this time was more balanced, the top two accounted for just 51.5 per cent of equity turnover, while the top five made up 86.4 per cent.

While concentration risk persists, the broader spread suggests a slow but encouraging deepening of market participation. On the winners’ side, 11 counters recorded gains, led by DCB (+39.02 per cent), MKCB (+28.38 per cent), MCB (+21.31 per cent), TTP (+12.50 per cent) and TOL (+11.11 per cent).

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The breadth of gains reflects ongoing investor interest beyond the largest banks and brewers, a healthy development in a market often dominated by a few names. Still, the losers drew more attention, particularly CRDB (-20.13 per cent), which had until recently been the retail investor’s darling.

A telling moment came early in the week when, by market close on Monday, CRDB’s order book showed 6.266 million shares offered for sale with no corresponding bids. That imbalance reflected a sudden turn from a buyers’ market to a sellers’ market, with investors rushing to capture profits after an extended rally.

By Friday, outstanding offers had eased to 1.83 million shares, suggesting selling pressure was subsiding, though the absence of bids points to lingering caution.

Fundamentally, CRDB remains sound, still trading above book value but at a thinner premium than during its peak at 1,500/- levels. For disciplined investors, this recalibration may present a more attractive entry point, especially as CRDB’s longer-term growth drivers in regional subsidiaries and digital banking remain intact.

Turning to fixed income, the Bank of Tanzania conducted a reissuance of the 15-year government bond on 20 August 2025, offering 191.82bn/- at a coupon of 14.5 per cent.

Demand was again overwhelming as investors tendered 668.69bn/-, oversubscribing the auction by 476.88bn/-. BoT accepted 244.32bn/- in successful bids, significantly above the initial offer but still disciplined in scope. Out of 226 bids submitted, only 50 were successful, underscoring both the appetite for duration and the selectivity with which BoT is managing its funding profile.

The weighted average yield came in at 13.91 per cent, down 67 basis points from the 14.58 per cent level at the last issuance of this tenor in March. The steady downward drift in yields reflects not just investor confidence but also BoT’s success in anchoring expectations and aligning market behaviour with its rate guidance.

Secondary bond market activity mirrored this momentum, with face value traded rising 25.7 per cent week-on-week to 246.77bn/-, the vast majority in government securities. The depth and liquidity in the secondary market is a constructive sign, suggesting that institutional investors are increasingly comfortable holding and trading government paper even as yields compress.

This creates a virtuous cycle: Lower yields reduce borrowing costs for the sovereign, while higher turnover enhances price discovery and strengthens the overall functioning of the market.

Volatility has undoubtedly risen, equities retracing sharply even as bonds continue to rally, but such environments is often where opportunity resides. Liquidity is abundant, the BoT remains committed to guiding interest rates lower and fundamentals in key sectors remain supportive.

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The challenge for investors is separating temporary dislocations from durable value. Equity valuations will continue to be influenced by falling discount rates.

Meanwhile, the fixed income market’s oversubscription rates confirm a structural demand for yield-bearing assets that should continue to anchor capital allocation across the system. In this environment, caution is warranted, but so too is vigilance for opportunity.

Markets are in the midst of repricing risk, redistributing liquidity and recalibrating expectations. For patient investors, these transitions often present opportunities. After all, to quote Warren Buffet, be “fearful when others are greedy and greedy when others are fearful.”