DSE outshines its peers in EAC
THE Dar es Salaam Stock Exchange (DSE) activities have continued to build up against its peers in East Africa as it heads towards the final month of quarter one.
The bourse’s local stocks measuring stick, The Tanzania Share Index (TSI) is already 4.1 per cent up since the beginning of the year, against a 9.1 per cent positive return for the whole of last year.
The Index also continues to reach new heights, closing last week at 4,046 points, which was last recorded four years ago.
Zan Securities Chief Executive Officer Raphael Masumbuko said the milestone moment was an indication of the growth and stability of the economy, thanks to positive earnings from some of the country’s top banks.
“A growing economy typically leads to higher profits for companies, which in turn can drive up stock prices and cause a stock market index to gain points,” Mr Masumbuko said yesterday through Zan’s weekly market wrap-ups.
Additionally, investors are drawn to the favourable investment climate and the prospects for returns in the stock market.
In the region, both, the Nairobi All Share Index (NASI) and the Uganda All Share Index (USE-ASI) are down 0.6 per cent and 0.04 per cent since the beginning of the year.
On an annual basis, NASI saw a 23 per cent decline last 2022, touching its 20 years low last June, while USE-ASI touched its ten years low in the same month.
Alpha Capital, Head of Research and Financial Analytics, Imani Muhingo said that most emerging markets equity prices have been suppressed since the beginning of last year as investors price in global headwinds including inflation, and the reaction of central banks thereof.
“Emerging equity markets saw the worst calendar year since 2008 as they fell by 20 per cent in US dollar terms last year,” Mr Muhingo said.
Nevertheless, Mr Muhingo said despite a positive return of the TSI during the period, a combined Price to Earnings (PE) ratio of the eight most traded counters on the DSE is now half that of 2017 and has been consecutively dropping for the last four years, from 10.14x in February 2019 to 6.04x this February.
The eight selected stocks include CRDB, NMB, DSE, Twiga Cement, Swissport, NICOL, TOL Gases and TCCIA Investment Company.
PE ratio measures the price of a company relative to its earnings.
“Price suppression results from a substantial foreign outflow from stock markets in emerging economies as foreign investors shy away from elevated risks in these markets mostly due to central banks raising policy rates to contain inflation,” Mr Muhingo said.
Tanzania saw foreign purchases of equities drop to 49 per cent last year of the total turnover compared to the historical average above 85 per cent.
Foreign purchase for January was 14 per cent of the turnover, compared to 78 per cent last January while foreign sales intensified from 41 per cent to 69 per cent during the same period.
Meanwhile, Vertex International Securities Advisory and Capital Markets Manager Ahmed Nganya said the domestic equities market posted an underwhelming performance last week following a huge decrease in volume and turnover.
“However,” Mr Nganya said, “foreign buyers and some domestic counter prices increased, which gives us the confidence of expecting a positive performance going into [this] week”.
Last week, DCB Bank led the gainers with a 6.67 per cent increase to 160/- per share and CRDB went up by 3.45 per cent to 450/- per share.
On the losing side, Simba cement suffered a 9.09 per cent decrease to 1,000/- per share. NICOL fell 1.25 per cent to 395 per share/-.
