DAR ES SALAAM Stock Exchange (DSE) stock market bull run since January comes to an end this month as investors shift their appetite to bonds.
The investors’ love for the stocks was pushed, mainly, by the banking sector after a stellar performance in their last year’s financials and expected to rub hands when dividends are announced—led by CRDB and NMB.
Zan Securities CEO Raphael Masumbuko said domestically, the bullish momentum, which commenced at the start of the year, halted in May.
“…Investors are gravitating towards fixed income securities further capitalising rising yields,” Mr Masumbuko said on Monday through the firm’s weekly market wrap-ups. In return both the total and domestic market capitalisation lost value last week as equities backtracked for a second week in a row.
“However,” Mr Masumbuko said, “We see this being a temporary gut. We see the rest of the year being optimistic for equities.” The CEO said the bond market this week will be dimmed, as the market allocates liquidity towards the auction of a 25-year Treasury bond on Wednesday.
“We expect the auction to oversubscribe with yields edging slightly upwards. Overall year to date the yield curve continues to steepen across the curve highlighting investors’ demand for higher rates,” Mr Masumbuko said.
Last week, DSE turnover plummeted by 73 per cent to 252.44m/- compared to the previous one. Orbit Securities Investment Analyst, Ammi Julian attributed the bearish mode to most domestic investors’ preference for government bonds due to their risk-free rate, fixed and certain income, and tax exemption.
“[This] is one of the lowest turnovers in a year,” Mr Julian said in the firm’s weekly synopsis.
He said that the absence of foreign investors, who have traditionally been the key drivers of the market, has played a significant role.
“Foreign investors typically transact shares in large quantities, and their absence has had a notable impact on the market,” he said adding low participation from the domestic investor base has contributed to the decline.
The country’s stocks are mostly reliant on foreign investors, who tend to have a higher propensity for risk-taking. Thus, Tanzania Share Index (TSI) gained 62.62 points during April, equivalent to a 1.62per cent gain of the domestic market capitalisation, while the financial sector remained in the spotlight.
“Out of ten counters that registered price movement [in April], seven counters were responsible for lifting the index while three counters moved in a counter-movement,” said Alpha Capital Head of Research and Financial Analytics, Imani Muhingo.
The upward movement last month was led by CRDB which gained 13.7 per cent and 36.7 per cent since the beginning of the year, thanks to a 45/- dividend announcement up from 37/- of 2021. Its price went down by 5.6 per cent to end the week at 510/-. NMB reported a 16.7 per cent profit growth quarterly and 21.3 per cent profit growth on an annual basis.
Despite impressive quarterly results, Mr Muhingo said, NMB was one of the three counters that fell during the month, sliding by 0.6 per cent to 3,500/-, while remaining unchanged during the week. Maendeleo Bank dropped by 7.6per cent to close the last month at 365/-.
However, the next best gainer for last month was DCB Bank which gained 8.8 per cent to 190/-, and has been rallying since the beginning of the year, on the back of a 146 per cent annual profit growth last year.
The price of DCB has risen by 23.3 per cent since the beginning of the year and 2.7 per cent in the first week of May 2023.
TCCIA Investment Company Ltd (TICL) gained 7.14 per cent to 150/- following anticipation of a dividend payment from its holdings. Four of TICL’s equity holdings have announced dividends so far, expecting an estimated 968.77m/- after taxes, before the end of June.