DSE registers substantial surge in market activities

DAR ES SALAM: THE month of September saw a substantial surge of market activities on the Dar es Salaam Stock Exchange originating from a number of prearranged block transactions, particularly on the TBL counter.

The total equity turnover for the month of September went up 340 per cent on a monthly basis, amounting to TZS 20.75 billion, compared to TZS 4.71 billion in August.

Tanzania Breweries Ltd (DSE: TBL) saw two major block transactions during the month. The initial block transaction was executed in the first week of the month, trading one million shares at a price of TZS 6,000/-. The second transaction was during the third week of the month, with the same of number of shares but at a price of TZS 6,500/-.

Thus, the turnover for TBL amounted to TZS 12.5 billion during the month, making the counter the top mover for the month, with a 60 per cent contribution to the total turnover. CRDB Bank Plc (DSE: CRDB) was the second top mover following a few prearranged as well as market transactions.

CRDB accounted for 19 per cent of the total turnover during the month, while the turnover on the counter went up 34 per cent on a monthly basis, to TZS 3.84 billion at the end of September. Other top movers were Tanzania Cigarette Company (DSE: TCC) and NMB Bank Plc (DSE: NMB) which collectively accounted for 15 per cent of the total turnover. Similar to the trend since last year, foreign participation was skewed on the selling side, with 55 per cent of divestments originating from foreign investors.

On the other hand, a mere 0.73 per cent of investments during the month originated from foreign investors. As a result, the net foreign outflow during the month amounted to TZS 11.25 billion ($4.41 million), compared to TZS 466.6 million ($0.18 million) in August.

All the major indices closed the month in the green mostly a result of positive movement on the NMB counter.

The Tanzania Share Index (TSI) gained 118.04 points during the month, to close at 4,280.33 points. The growth is equivalent to 2.84 per cent monthly growth of the domestic market capitalization which closed the month at TZS 11.32 trillion. The All Share Index (DSEI) similarly went up by 7.4 points to 1,782.75 points.

The DSEI uptick results from a 0.42 per cent growth of the total market capitalization, which closed the month at TZS 14.87 trillion. The growth of the indices was mostly influenced by the 19.2 per cent growth of the NMB price during the month. NMB remained the top gainer for a second consecutive month as the price moved up from TZS 3,860/- in the end of August, to TZS 4,600/- in the end of September.

The appreciation of NMB originates primarily from the half year performance where the six months net profit grew by 26 per cent compared to a similar period last year. During the end of September, NMB registered a medium note program with an approval to raise up to TZS 1 trillion in a period of ten years.

In the first tranche dubbed NMB Jamii Bond, NMB plans to raise TZS 75 billion, with a green shoe option of TZS 25 billion.

On the tranche, NMB already has two anchor investors, World Bank’s IFC, and British International Investment (BII). Collectively, the anchor investors can invest up to $45 million in the first tranche, which equates to approximately TZS 114.75 billion.

The bond pays an annual coupon of 9.5 per cent which shall be paid on a quarterly basis, for the next three years, and pay back the principal amount on the last payment date. The minimum investment value is TZS 500,000/-, with integral multiples of TZS 10,000/-.

The offer is open until 27th October 2023 for applicants interested in purchasing the bond. On the same tranche, NMB plans to raise another $10 million, with a green shoe option of $5 million, denominated in the USD. The bond shall pay a floating rate which equates to 2.50 per cent added to the six months USD term Secured Overnight Financing Rate (SOFR).

SOFR is the broad measure of overnight borrowing cost in the repurchase agreement (repo) market, collateralized by U.S Treasury securities. Similarly, the USD bond’s tenor is three years and the minimum investment value is $1 million, with integral multiples of $100,000.

Other gainers during the month were TCCIA Investment Company Ltd (DSE: TICL), TOL Gases Ltd (DSE: TOL) and National Investment Company Ltd (DSE: NICO). TICL went up 10 per cent as the price closed the month at TZS 165/-. The price of TICL is most likely uplifted by the rights issue announcement.

TOL and NICO went up by 4.84 per cent and 3.09 per cent respectively. The price of TOL was influenced by the dividend of TZS 50/- which shall be paid on or by 20th October 2023 while the counter began trading ex-dividend on 16th September 2023.

The price of NICOL was influenced by the anticipation of the dividend, as investors waiting for the AGM on 7th October 2023. Six counters saw their prices fall during the month, but the weights were offset by the weight of NMB leading to a net gain of the TSI. Leading losers were Maendeleo Bank Plc (DSE: MBP) and Mkombozi Commercial Bank Plc (DSE: MKCB).

The two banks dropped by 9.52 per cent and 8.70 per cent respectively. Other losers included Tanga Cement Plc (DSE: TCCL) which dropped by 4.44 per cent despite the announcement released by the company that the FCT hurdles have been lifted, and the FCC unconditional approval prevails. CRDB also fell by 4.35 per cent as the counter still suffers from the mere 3 per cent half year profit growth, down from 96 per cent growth in the previous year.

The trailing dividend yield of CRDB has risen to 10.2 per cent, up from 8.2 per cent when the counter approached the ex-dividend in May 2023.

DCB Commercial Bank Plc (DSE: DCB) and Dar es Salaam Stock Exchange (DSE: DSE) were other losers and fell by 3.45 per cent and 3.30 per cent respectively.

The price of DCB has been volatile since the beginning of the year, with an initial appreciation following impressive annual results, but began falling from investors’ realization of ineligibility of DCB to pay dividends for the year 2022. The movement of DSE price is likely out of normal market volatility.

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