DSE on bearish mood as major indices end week in red

A BEARISH week at the Dar es Salaam Stock exchange as both of the major indices closed in the red. The All Share Index (DSEI) sank by 42.60 points following major declines in cross-listed stocks’ prices.

The total market cap closed at TZS 15.6 trillion ($ 6.69 Bln), 2.2% lower than TZS 15.9 trillion ($ 6.85 Bln) recorded in the previous week.

The Tanzania Share Index (TSI) was down by 23.61 points as several domestic counters’ stock prices tanked. This led to a tumble in the domestic market cap by 0.6%, as its value dropped from TZS 10.338 trillion ($ 4.43 Bln) recorded last week to TZS 10.275 trillion ($ 4.41 Bln) observed this week.

Following several weeks of high market activities and turnovers largely driven by block trades, this week the market shrank to a fourweek low, recording TZS 1.13 billion ($ 487 thousand) worth of turnover, following a transaction of 1.5 million shares. This is equivalent to an 86% drop from the TZS 8.2 billion ($3.5Mln) worth of turnover recorded in the past week which saw 5 Million shares exchange ownership.

Counters driving this week’s turnover included Twiga Cement, which accounted for 35% of the total turnover. Other major contributors to the turnover included CRDB, VODACOM, NMB, and TCCL, as they accounted for 27%, 23%, 11%, and 1% of the total turnover, respectively.

CRDB continued to facilitate liquidity on the bourse as 51% of the volume of shares traded belonged to the counter. On a rare occasion, there were no positive price movements in the bourse, as no counter closed the week trading at a higher price compared to the last week’s closing prices.

On the other hand, 5 counters witnessed a drop in the share prices, Mwalimu Commercial Bank (MCB) being the largest culprit as its share price tanked by 9.7%. Tanga Cement’s share price dropped by 3.8% as investors pricedin their second quarter financial results for the year 2022, from which the company reported a TZS 1.959 Billion loss.

Moreover, the company announced that its investors won’t be receiving dividends for the year 2022, as the company plans to remain prudent with its available cash resources. Other notable losers of the week included CRDB, NMB, and NICOL which saw their share price sink by 2.5%, 2%, and 1.4%, respectively.

A bearish trend was also observed in cross-listed counters, as NMG share price declined by 7.9%, KCB’s counter tanked by 6.1%, and EABL share price plunged by 3.4%. Our rationale is, that the observed declines are driven by major sell offs by investors who are now taking their profits after a one-month rally at the Nairobi Stock Exchange (NSE).

Foreign investor participation dwindled throughout the week as only 33% of shares purchased, worth TZS 380 Million, were attributed to them. On the other hand, local investors were the leading buyers and sellers, accounting for 67% of all share purchases worth TZS 756 Million, and 100% of all the sales.

Bond Market The Bank of Tanzania held a ten (10) year bond auction during the week. This was the first of the “new coupon rate” 10-year bonds, following a change in coupon rates by the Central Bank in the first half of the year. The bank sought to raise TZS 133 Billion from the public, offering a 10.25% coupon rate.

The public tendered a total of TZS 30 Billion, making the auction undersubscribed by 77%. The weighted average price for successful bids was 98.75, yielding 10.45% for investors.

All 41 bidders got their bids successfully admitted. Money Market On the Interbank Foreign Exchange Market (IFEM), the volume transacted amounted to $ 8.5 Mln, which is about 20% lower than the $10.6Mln exchanged in the prior week.

The exchange rate between TZS/USD closed the week at a WAR of TZS/ USD 2,317.86, as opposed to the prior week’s closing rate of TZS/ USD 2,317.52 In the ICBM, the interbank rate closed the week at 4.5%, as TZS 50 billion was transacted, equivalent to a 144% increase from TZS 20.7 Bln transacted last week.

The interbank rate ranged between 4- 4.9%, with only one day being an outlier (Wednesday) where the interbank rate was at 2.52%.

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