DSE activity eases amid broad capital markets recalibration

DAR ES SALAAM: MARKET activity during the week ending 25th April 2025 softened notably, reflecting a broader period of recalibration across the capital markets.

Both equity turnover and share volumes traded recorded significant declines, signalling a temporary pause in investor enthusiasm as focus shifted towards the fixed income side, particularly in anticipation of the upcoming 10-year government bond auction.

The bourse registered a total equity turnover of 3.57bn/-, representing a sharp 49.03 per cent contraction from the prior week’s turnover of 7.0bn/-.

More tellingly, foreign participation exhibited weakness, as the market recorded a net foreign outflow of 353.99m/-. Foreigners accounted for only 10.17 per cent of total equity sales and an even lower 0.25 per cent of purchases, suggesting a cautious external positioning amid evolving yield expectations and a strengthening shilling environment.

CRDB Bank once again dominated equity market activity, posting a weekly turnover of 3.37bn/- and commanding a massive 94 per cent share of total market turnover. Its resilience highlights the sustained local appetite for large cap banking stocks, particularly given the attractive dividend narratives postearnings season.

Tanzania Portland Cement Company (TPCC) followed distantly, generating 60.3m/- in turnover, representing a mere 2 per cent of the week’s activity. Other notable participants included NMB Bank (58.7m/-), NICO (23.1m/-), DSE (15.2m/-) and Afriprise (12.7m/-), collectively contributing marginally to the overall turnover.

From a price movement perspective, the week revealed a mixed sentiment landscape. On the gainers’ side, Afriprise and Maendeleo Bank emerged ahead, recording share price appreciations of 4.2 per cent and 2.60 per cent, respectively.

Afriprise’s rally appears to be driven by its relative undervaluation and opportunistic accumulation by domestic investors, while Maendeleo Bank continues to benefit from its expanding operational footprint and enhanced digital offerings post national license upgrade.

Conversely, pressure weighed heavily on TPCC (-0.98 per cent), Tanga Cement (-2.22 per cent), NICO (-4.17 per cent) and Mkombozi Commercial Bank (-5.17 per cent), reflecting isolated pockets of profit-taking and shifting investor preferences amid a liquidity sensitive environment.

Turning to the fixed income segment where activity appears to have also softened, market activity also experienced a notable slowdown. Total bond face value traded fell sharply by 93.88 per cent to 11.47bn/- from the previous week’s robust turnover. Despite the moderation, several critical trends emerged that offer insights into the current market dynamics.

One notable development is the heightened investor anticipation surrounding dividend payouts, as two of the market’s heavyweight counters, CRDB Bank and Swissport, announced generous dividends during the week. Swissport declared a dividend of 70/72 per share, with the ex-dividend date set for 15 May 2025 and the payment date scheduled for 2 July 2025.

Meanwhile, CRDB Bank, following its strong 2024 earnings, announced a dividend of 65/- per share, with an ex-dividend date of 7 May 2025 and a similarly scheduled payment date of 2 July 2025. These dividend announcements are likely to further anchor market sentiment in the short term, as investors reposition portfolios to capitalise on the upcoming income distributions, reinforcing the theme of selective accumulation in fundamentally strong counters.

Government bonds continued to dominate trading volumes, led by the 15-year bonds carrying a 13.50 per cent coupon, which accounted for 4.05bn/- in face value traded.

Meanwhile, the 20-year bond issued with a 15.25 per cent coupon remained the most actively traded in terms of the number of deals, with 3.96bn/- in face value transacted across 29 separate trades, underscoring sustained appetite for longer tenured instruments offering yield pick-up relative to the shifting curve.

Corporate bonds registered minor activity, with four deals executed across issues from NMB Bank, Azania Bank and CRDB Bank’s Samia Bond. While corporate bond turnover remains modest relative to sovereign issuances, the persistent trading of these papers reflects growing confidence in corporate debt markets and a gradual maturing of investor risk appetite.

Meanwhile, compression in yields appears to persist. The Treasury Bills auction held during the week provided further validation of the downward trajectory in shortterm yields. The 365-day paper recorded a Weighted Average Yield of 8.9141 per cent, a slight but important decline from the 8.9344 per cent yield achieved during the previous auction on 9th April 2025.

This auction marks the eighth consecutive Treasury Bills issuance since January where yields have continued to compress, from the peak of 12.7820 per cent achieved on 15th January 2025, underscoring the broader shift towards a lower yield environment across both short- and long-tenured instruments.

Notably, this phenomenon is not isolated to the T-bill market. Similar patterns are emerging in the government bond auctions, where long-term papers have also witnessed gradual yet persistent yield compression.

This alignment across tenors strengthens the thesis that Tanzania is currently transitioning into a lower interest rate cycle, a trend being catalysed by a combination of robust macroeconomic stability, subdued inflation and the central bank’s strategic liquidity management efforts.

Looking ahead, as we look towards the upcoming auctions, my eyes now turn toward the reopening of the 10-year Treasury bond scheduled for auction on 30th April 2025. Given that it is a reissuance, the bond will carry a coupon rate of 14 per cent. However, yield expectations are likely to moderate relative to the original issuance.

If we extrapolate from prior auctions, where yields dropped by roughly 0.5 per cent, then it is reasonable to expect clean prices in the upcoming auction to range between 102 and 103, while dirty prices (inclusive of accrued interest) could land between 105.5 and 106.5.

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Though no outcome is guaranteed, such projections suggest investors will increasingly find themselves in a race to lock in relatively high yields before further compression sets in.

With dividend season in full swing and bond yields visibly trending downward, the Tanzanian capital markets remain rich with opportunity—both in equities and fixed income. Investors who act strategically and seek professional guidance may well position themselves to extract strong risk-adjusted returns from an increasingly dynamic landscape.