The equity market posted a turnover of TZS 1.0 billion, a 55 per cent drop from the previous week’s turnover of TZS 2.0 billion.
Moreover, the number of shares traded declined to 1.3 million from the previous 6 million traded shares.
The All-Share Index gave up 0.92 points, pulling down the total market cap to TZS 15.57 trillion, a 0.05 per cent from the previously recorded TZS 15.58 trillion.
Major culprits included the cross-listed stocks. KCB Bank closed the week 4.0 per cent lower and EABL’s share price dropped by 0.63 per cent. The Tanzania Share Index (TSI) rose by 28.42 points as NMB and Twiga Cement closed the week 4.3 per cent and 3 per cent higher.
Contrary to the recent trend, foreign investor participation improved significantly, contributing to about 45 per cent of all activity in the equity market.
In recent weeks, local investors accounted for more than 90 per cent of all market activities as risk aversion grew among foreign investors due to looming fears of a global economic meltdown. Banking stocks, NMB, and CRDB accounted for more than 80 per cent of all market activity.
NMB took lead in total turnover while CRDB was the most liquid stock, accounting for 81 per cent of the total volume of shares traded. CRDB’s share price has increased by 36 per cent since the opening of the market in January 2022, while NMB stock price has surged by 46 per cent, from TZS 2,000 in January to TZS 2,920 as of last Friday.
Other notable gainers in the bourse over the year include; SWISS, which is trading 44 per cent higher, DSE (+43 per cent), TOL (+14 per cent), Twiga Cement (+8.8per cent), NICOL (+8 per cent), and Tanga Cement (+7 per cent.).
Government Bond Market The Bank of Tanzania held the 20-year bond auction last Wednesday. It was an unusual auction as all 286 bids got accepted. Growing demand for long-tenured bonds has seen investors bid at competitive prices in fear of missing out.
Well, that was not the case last Wednesday when the Government swept all that was available in the auction.
The auction was oversubscribed by 162 per cent as the government mopped TZS 220.4 billion from prospective investors.
A major highlight was the minimum successful price of 93.7684 which left many investors in disbelief due to the competitive nature of the long-tenured bonds’ bid prices.
The current yield sits at 12.2 per cent, ten basis points higher than the previous yield of 12.1 per cent. It will be interesting to observe the market reaction in the forthcoming 10-year and 25-year bond auctions that are going to take place on the 7th and 21st of Dec, respectively. Corporate Bond Market It has been an active quarter for corporate bonds as the market expects two new products, NBC’s Twiga Bond and KCB’s Sukuk. The National Bank of Commerce (NBC) expects to list its first corporate bond on the 15th of December 2022.
The bond named “Twiga” matures in 5 years, paying a 10 per cent fixed coupon rate, semi-annually. Its offer window for interested investors is open until 6th December. It is the first of the non-taxable corporate bonds in Tanzania following amendments in the 2022 Finance Bill.
The minimum amount to be invested is TZS 500,000 and anyone can invest through NBC branches or any of the licensed stockbrokers. On the other hand, the exchange expects to list the first Sukuk in its corporate bond segment on the 16th of December 2022.
KCB (Tanzania) is the issuer with the proceeds directed towards supporting its Islamic Banking Division (KCB Sahl Banking).
Sukuks are different from conventional bonds as they represent ownership stakes in assets or business activity rather than representing debt obligations as in conventional bonds.
The underlying assets to be financed by a Sukuk issuance are shari’ah compliant in both their nature and use while normal conventional bonds can finance any legal project.
Furthermore, sukuks encourage profit sharing avoiding interest rates which are the norm in conventional bonds. KCB Tanzania aims to raise TZS 10 billion, and the proceeds shall be invested under the mudaraba (profit sharing) contract. The minimum amount to be invested is TZS 500,000 and the indicative profit rate is 8.75 per cent per annum.
The Sukuk matures after 3 years. The subscription window for interested investors is open until 5th December 2022. Investors desiring to invest can visit KCB Tanzania and various licensed and regulated stockbrokers.
