DSE poised for strong earnings-driven rally

DAR ES SALAAM: THE Dar es Salaam Stock Exchange (DSE) is poised for an earnings-driven rally as investors await quarter two (Q2) financial results from key companies, analysts said.

The market is anticipating robust activity in the coming weeks, buoyed by expectations of strong earnings growth from leading counters.

Also, investors are positioning for potential upside on the back of rising revenues and improved cost efficiencies, which are seen as catalysts for further gains in the domestic index.

Zan Securities’ Advisory and Research Manager Isaac Lubeja said the market is bracing for a series of corporate financial disclosures, with companies such as CRDB Bank, NMB Bank and Vodacom projected to post solid year-onyear earnings growth.

“Positive earnings surprises could fuel further price momentum and boost the domestic index,” Mr Lubeja told the Daily News yesterday.

However, he cautioned that risks remain particularly external shocks such as global commodity price volatility and regional geopolitical tensions, which could dampen investor sentiment.

Portfolio diversification, active fund management and vigilant monitoring of macroeconomic trends remain key for navigating the remainder of quarter three, Lubeja said.

Alpha Capital Head of Business Development and Customer Services Godfrey Kamugisha (pictured) said the country’s capital markets are signalling maturity, both in the equity and fixed income segments.

“Institutional positioning is deepening, retail engagement is increasing and the policy framework is evolving toward stability and growth,” Mr Kamugisha said adding: “While volatility may remain in specific counters or segments, the macro signal appears to suggest that we are entering a lower-rate regime.”

He said equities, particularly those with strong earnings momentum and pricing power, remain well-positioned to attract further capital in this regime.

Vertex International Securities, Capital and Advisory Manager, Ahmed Nganya said they anticipate a rise in market activity as investor interest in certain counters.

“We expect an increase in activity this week as we anticipate investors’ appetite in some counters such as TBL to continue,” Mr Nganya said.

Despite a minor weekly pullback in share price, TBL’s liquidity depth and institutional interest reflect its continued status as a defensive anchor in many institutional investment portfolios.

TBL emerged as the dominant player, contributing 62 per cent of the total market turnover, a reflection of heightened investor interest in the counter.

ALSO READ: DSE weekly turnover nearly doubles

Close behind was CRDB, which accounted for 21.22 per cent, continuing to attract attention following its consistent price momentum and recent corporate developments.

TPCC and NMB contributed 9.11 per cent and 3.53 per cent of the total turnover, respectively, reinforcing their positions as notable movers in the week’s trading session.

“These movements point to rising investor interest in financial services and telecommunication counters, sectors expected to benefit from Tanzania’s ongoing digital and financial inclusion agenda and improved pricing mechanism by the exchange,” Mr Kamugisha said.

Last week trailing closely in influence was CRDB Bank, which posted 5.27bn/- in equity turnover.

Other notable contributors included TPCC (2.26bn/- ), NMB (876.5m/-) and KCB (741.9m/-), indicating that while the market breadth in terms of turnover remains concentrated, investor activity is widening gradually across mid-tier names.

“This is driven in part by its recent price momentum and investor anticipation ahead of its mid-year earnings announcement,” Kamugisha said.

In terms of share price movement, the equity market remained dynamic, with National Investment Company (NICO) leading gainers, climbing +19.51 per cent to close at 1,470/- per share.

“The rally likely reflects investor repositioning into undervalued or overlooked counters, possibly anticipating a valuation rerating driven by improved earnings or dividends,” Kamugisha said.