Domestic participation in the Dar es Salaam Stock Exchange (DSE) has been rising since the dawn of the pandemic in 2020 as the business community turned to capital markets to invest idle funds.
Alpha Capital Head of Research and Financial Analytics Imani Muhingo said this was complemented by various financial awareness programmes conducted by different stakeholders including the exchange, Capital Market and Securities Authority (CMSA), incubator hubs and brokers.
“We have even seen a rising number of financial coaches in the last three years who are playing a key role in raising financial literacy in the community,” he said.
Also, a complementing factor is the increased financial inclusion through digital transactions and mobile money.
On the other hand, as domestic participation rises, foreign participation has been declining and skewed to the selling side since the beginning of last year, as global central banks adopted contractionary policies to suppress inflationary pressures that were triggered by the Ukraine conflict, while origins can partly be traced to the hefty monetary injections during the pandemic.
Data has shown that in the last eighteen months, the net foreign outflow has amounted to approximately 6.38bn/- (2.6million US dollars) while the average monthly foreign participation has lowered from above 75 per cent in the beginning of last year to less than 40 per cent in June, having reached a bottom of 14.1 per cent in March.
Global economic developments do not indicate a near end of the foreign outflows from emerging and frontier markets as central banks in developed economies still indicate continued tightening policies through raising interest rates, to suppress inflation down to target rates.
The Zan Securities Limited Market Wrap-Up shows that the second half of this year started on a positive note, as the benchmark indices DSEI and TSI showed growth of 1.99 per cent and 0.44 per cent, respectively.
This resulted in an increase of 298.78bn/- in total market capitalisation and 43.30bn/- in domestic market capitalisation.
“We have a positive outlook for equities this year with some local stocks still considered slightly undervalued despite positive earnings momentum and sentiment.
“Our analysis indicates that there will be record earnings growth this year, primarily driven by the banking, industry, and property sectors,” stated the report.
Looking ahead, it is expected that there is increased market activities in the coming weeks as companies prepare to release their second-quarter financial reports, generating more interest and trading.
