DSE turnover up, market cap down

The Dar es Salaam Stock Exchange (DSE) registered increased activities for the trading week ending March 31.

Turnover for the week amounted to 1.728bn/-, an increase of 155.9 per cent from the previous week, however a number of cross listed stocks experienced price declines leading to the overall decrease in market capitalization by 0.22 per cent.

The top three trading counters, CRDB, NMB, and TCCL, dominated the market with 39.27 per cent, 35.42 per cent, and 8.78 per cent of the overall market turnover, respectively. Some counters reported downward price trends regressing from the previous week.

Four domestic counters registered price gains within the week, SWISS leading the gainers with a 14.08 per cent increase to close at 1,620/- per share. TCCL/Simba also saw a price increase of 1.59 per cent closing the week at 1,280/- per share. DSE registered an increase of 1.18 per cent closing the week at 1,720/- per share. CRDB sustains its bullish run registering an increase of 1.06 per cent closing the week at 475/- per share.

Alternatively on the losers’ side heavily weighted NMB lost 2.78 per cent of its value closing off the week at 3,500/- per share, impacting domestic market capitalizstion.

Total market capitalization went down by 0.22 per cent to 15.741tri/- and domestic market capitalisation went down by 0.26 per cent closing at 10.815tri/-.

Key benchmark indices

All Share Index (DSEI) closed at 1,888.79 points decreasing by

Sector Indices

Industrial and Allied Index (IA) closed at 5,084.74 points, up by 0.02 per cent bank, Finance and Investment Index closed at 3,955.33 points, down by

1.14 per cent.

Commercial Services Index closed at 2,160.37 points, up by 0.39 per cent.

Debt Market

Primary market

On Wednesday 29th March 2023, the central bank was in the market offering 104bn/- to investors for a new 15-year Treasury bond offering a 11.15 per cent coupon rate annually.

The auction was subscribed by 76.2 per cent – the auction received bids totaling 79.27bn/- and accepted bids worth 78.12bn/-.

Data shows decline in demand in the 15-year bond shown by low subscription rates in all past auctions since the downward revisal of coupon rates in 2022 although other maturities especially the 20-year and 25-year have been somewhat resistant still being oversubscribed. Investors put in bids in this auction with uncertainty ahead of the upcoming inflation figure on 10th April 2023. High inflation erodes the returns of bondholders thus bond investors are keen on the figure.

The weighted average yield to maturity climbed 19.32 basis points relative to the previous auction held in late January this year from 11.4332 per cent to 11.6264 per cent. Yields have edged higher over the last four auctions gaining 35.84 basis points from the average yield in June 2022.

Moreover, the price floor has been lowered to 95 from 98 with acceptance rates evolving over the period. This continues to reflect lessened monetary policy accommodation by the central bank to control inflation.

Secondary market

Trading activities increased for the trading week ending March 31. Overall turnover for the week increased by 91 per cent from 39.2bn/- registered in the previous week to 75.084bn/-.

More so number of trades increased from 25 trades recorded in the previous trading week to 38 trades.

Overall tenures traded were predominately on the mi-segment of the yield curve, with the off-the-run 10-year accounting for 58.6 per cent of the traded volumes. No activities were registered in the corporate bond segment.

We expect trading activities to slightly go down next week as the market anticipates the 25-year Treasury bond auction scheduled for April 5.

Outlook

Domestically, local investors continue to flood the market accounting for over 98 per cent of March’s equity turnover so far. Strong economic growth outlook and a positive trend in domestic equities continue to strengthen investor sentiments.

The Tanzania Share Index (TSI) trends at 5-year high levels, further banking stocks such as NMB and CRDB have returned to investors 15.8 per cent and 20.2 per cent respectively year to date. Our outlook for the year remains strong.

We expect increased activities in the exchange to be fuelled by growth stocks. As many investors are now seeking capital gains and dividend returns, slightly turning a blind eye to treasury bonds whereby yields are foreseen to remain at current levels.

Globally, investors are still weighing risk to financial stability in response to the recent banking crisis. Recently the International Monetary Fund called for greater vigilance over the global financial system which might translate to a greater vigilance by global central banks in response to rate hikes. We see major central banks moving away from a “whatever it takes approach” to tame inflation, to a more cautious phase protecting market stability.

Mr Masumbuko is a Chief Executive Officer of Zan Securities—a capital markets and securities authority licensed dealer and a member of the DSE. raphael.masumbuko@zansec.co.tz

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