Capital markets rally on renewed confidence

DAR ES SALAAM: WITH January well behind us, we can confidently hold that Tanzania’s capital markets began 2026 on a notably strong footing, recording a sharp rebound in equity trading activity, rising market capitalisation and sustained investor demand for government securities throughout the month. The performance signals renewed investor confidence and improved liquidity conditions at the start of the year.

According to the January 2026 market data, total equity turnover surged to 189.75bn/-, up from 55.42bn/- in December 2025, a remarkable 242 per cent month-on-month increase. Compared to January 2025, 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 year-end trading period and reflects stronger institutional participation, improved domestic liquidity and renewed investor risk appetite. Portfolio rebalancing at the start of the financial year also contributed to heightened activity.

Market capitalisation recorded equally strong gains. Total market capitalisation rose 18 per cent month-onmonth to 28.32tri/-, up from 23.99tri/- in December 2025. On a year-on-year basis, market capitalisation increased by 53 per cent, demonstrating sustained structural growth in equity valuations.

The domestic segment outperformed, climbing 24 per cent over the month and 54 per cent compared to January 2025, reflecting strengthening performance among local listed counters.

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The parallel appreciation of both the DSEI and TSI indices suggests that the rally was broad-based rather than driven by isolated counters. 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 fixed-income instruments.

The broad participation indicates strengthening investor confidence rather than shortterm speculative trading. Banking and industrial stocks dominated market activity. CRDB Bank Plc emerged as the most actively traded counter, accounting for 64 per cent of total market turnover during the month.

NMB Bank Plc also recorded significant activity, alongside Tanzania Cigarette Company (TCC), KCB Group Plc, Tanzania Breweries Limited (TBL) and AFRIPRISE. The concentration of trading in large-cap counters highlights their continued role as liquidity anchors within the market. Exchange Traded Funds (ETFs) delivered mixed but generally constructive performance.

The VIS ETF closed January at approximately 395/-, marginally below its December closing price, reflecting a period of consolidation following earlier gains. While trading volumes were volatile early in the month, price stability suggests that the fund retained much of its previous rally. In contrast, the iTrust EAC Large Cap ETF recorded a strong debut.

After listing at an IPO price of 1,000/- , the ETF rose steadily to approximately 1,210/- by month-end. Despite fluctuating volumes typical of newly listed instruments, the upward price trend indicates positive early market reception and growing investor confidence in regional largecap exposure.

The fixed income market also demonstrated resilience, particularly in the primary segment. In mid-January, the government successfully issued a 10-year Treasury bond carrying a coupon of 11.75 per cent.

The auction attracted strong demand, with total tenders exceeding the amount offered, resulting in a 134 per cent oversubscription rate. The bond cleared at an average yield of 11.30 per cent, reflecting a continued decline in yields and strong investor appetite for longerdated government securities. The bond was issued at a premium price, underscoring.

positive market sentiment and heightened confidence in sovereign instruments. Although the government accepted slightly less than its full funding target, the oversubscription demonstrates robust demand conditions. In contrast, the secondary bond market experienced a slowdown compared to December’s elevated trading levels. Turnover declined by approximately 61 per cent month-on-month.

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Analysts suggest this moderation reflects reduced repositioning activity following heavy trading at yearend, rather than weakening demand fundamentals. Government securities continued to dominate secondary trading, particularly medium- to long-term maturities.

Investor participation trends revealed strong domestic dominance on the buy side. Domestic investors accounted for nearly 99 per cent of total equity purchases during January. Foreign investors, meanwhile, were net sellers, registering outflows of approximately 55bn/-.

Despite continued foreign net selling likely influenced by global risk considerations, robust domestic demand effectively absorbed the supply, supporting market stability. Looking ahead, the outlook for the country’s capital markets remains moderately to strongly positive.

Elevated equity turnover, rising valuations, and sustained gains in benchmark indices suggest continued liquidity support and investor confidence. Banking and industrial counters are expected to remain key drivers of market performance. In the fixed income segment, demand for government securities is likely to stay firm amid declining yields and continued appetite for longer-term instruments.

Secondary market activity may stabilise as investors adopt more hold-oriented strategies. Overall, January’s performance signals a constructive start to 2026 for the country’s capital markets, supported by stable macroeconomic conditions, strong banking sector fundamentals and sustained domestic investor participation.