DSE witnesses marginal turnover decline

• Equity market

DAR ES SALAAM: DURING the trading week ending on February 9th, the Dar es Salaam Stock Exchange (DSE) witnessed a marginal decline in turnover compared to the previous week, although it remained above the year-to-date weekly average.

The overall market turnover decreased to TZS 7.3 billion, marking a 7.68 per cent decline from the previous week’s TZS 7.9 billion.

High activities on the prearranged board notably contributed to the increased market turnover, with the CRDB counter registering block trades of 14,175,879 shares at an average price of TZS 460.

Throughout the week, CRDB continued to dominate trading propelled by strong financial performance in the fiscal year 2023, accounting for 95.63 per cent of the total market turnover, followed by NICO with 1.95 per cent and DSE with 0.81 per cent.

Domestic stocks displayed a bullish trend during the week, with five counters experiencing positive price movements. NICO saw the most substantial gain, concluding the trading week at TZS 570 per share, reflecting a 9.62 per cent increase.

CRDB also demonstrated positive movement, with a 7.53 per cent increase, closing the week at TZS 500 per share. NMB closed the week at TZS 4,660, representing a 3.56 per cent upside, while the exchange itself, DSE, saw a 1.11 per cent increase, concluding at TZS 1820 per share.

TPCC had a marginal upside, gaining 0.93 per cent to reach TZS 4,340 per share. Conversely, SWISS and TICL were the counters that experienced a decline in value during the week. SWISS dropped by 3.23 per cent, closing at TZS 1,200 while TICL lost 2.56 per cent, closing at TZS 190 per share.

In terms of market capitalisation, there was an overall increase of 1.44 per cent in the total market capitalisation, reaching TZS 14,728.54 billion. This growth was primarily driven by the appreciation in the prices of cross-listed counters such as EABL and JHL.

Similarly, the domestic market capitalisation experienced a slight uptick of 1.58 per cent, concluding with a value of TZS 11,606.16 billion.

Monetary measures cool financial dollarisation. FINANCIAL dollarisation in Tanzania is declining to ease US dollar pressure on the shilling thanks to measures taken to improve the forex market and enhance foreign exchange inflows.

Last year’s ratio of foreign currency deposits to broad money (M3), a measure of financial dollarisation, slowed and remained below levels reached 2021.

According to the central bank’s latest monetary report, the ratio throughout last year was between 21 and 23 per cent compared to 21 and 24 in 2021.

Last year the holding of foreign currency deposits increased moderately by between 3.5 billion US dollars and 4.2 billion US dollars which was an all-time high range from 3.0 billion US dollars to 3.6 billion US dollars between 2021 and 2022.

January 2024 inflation remains at 3.0 per cent According to the National Bureau of Statistics, the Annual Headline Inflation Rate for the month of January, 2024 has stagnated at 3.0 as it was recorded in December, 2023.

The stagnation of the headline inflation explains that, speed of price change for commodities for the year ended January, 2024 has remained the same as the speed that was recorded for the year ended December, 2023.

The overall index went up from 110.81 recorded in January, 2023 to 114.09 in January, 2024. Food and Non-Alcoholic Beverages Inflation Rate for January, 2024 has decreased to 1.5 per cent from 2.3 per cent that was recorded in December, 2023.

On the other hand, Annual Inflation Rate for all items without food and non-alcoholic beverages for January, 2024 has also decreased to 2.8 per cent from 3.3 per cent that was recorded in December, 2023.

On a month to month basis between December,2023 and January, 2024 the CPI index has increased by 0.7 per cent. Some food items that contributed to an increase of the index include; sorghum flour by 3.9 per cent, fresh sardines by 0.8 per cent, dried sardines by 2.6 per cent, round potatoes by 1.6 per cent, dried peas by 0.8 per cent and dried cowpeas by 0.6 per cent.

Some Non-Food items that contributed to an increase of the index includes; kerosene by 1.7 per cent, firewood by 3.9 per cent, charcoal by 4.0 per cent, health services by 0.7 per cent, passenger transport by road by 2.1 per cent, passenger transport by taxi by 2.2 per cent, transportation of pupils by school bus between their homes and school by 9.2, education services (school fees) by 1.6 per cent, food and beverage serving services by 1.4 per cent and personal care by 2.2 per cent.

Primary market: On Wednesday 07th February 2024, the Central Bank was in the market offering TZS 148 billion to investors for a new 15- Year Treasury bond offering an 11.15 per cent coupon rate annually.

The auction was oversubscribed receiving 214.60 per cent subscription – the auction received bids totaling TZS 317.602 billion and accepted bids worth TZS 107.082 billion.

The 15-yr has seen oversubscription being the first time since 2022. In this auction this maturity was oversubscribed, receiving 214.60 per cent subscription and the price floor being further lowered to 80 from 83 in the previous auction.

The weighted average yield to maturity gained 90.27 basis points relative to the previous auction held in November last year from 12.7525 per cent to 13.6552 per cent. Yields have edged higher over the last five auctions gaining cumulative 169.98 basis points from the average yield in June 2023.

Moreover, the price floor has been lowered to 80 from 95 on March 2023. This reflects lessened monetary policy accommodation by the central bank to keep inflation within the target range.

Inflation rates have dropped from a high of 4.9 per cent in January 2023 to 3.0 per cent recorded in January 2024. The central bank’s policy still stands on lessened monetary policy accommodation.

During the week ending February 9th, market activities reduced relative to the previous week. The total turnover experienced a slight decrease of 12.66 per cent, decreasing from TZS 70.9758 billion to TZS 63 billion.

Similarly, the number of trades decreased marginally from 64 to 60. Similar to last week, trading was largely dominated by the on-the-run 25-year Treasury bond, accounting for 76.2 per cent of the total turnover.

In the corporate bond segment, activities were heightened relative to last week. Both NMB-2023/26.T1, NMB2022/25.T4 registered trades, with the former trading and aggregate of TZS 132 mn at average prices of 87 and the latter trading an aggregate of TZS 1mn at an average price of 90.

Equities: As highlighted previously, preliminary FY 2023 reports by CRDB and NMB will propel the market into a bull cycle, with both bank registering +7.53 per cent ,+3.56 per cent respectively. Which largely contributed to the domestic market capitalisation adding TZS 180 billion within the week. In the weeks ahead we expect more upside growth from these banks.