Dar es Salaam Stock Exchange (DSE) is anticipated to enter into equities price volatility as investors are at crossroads on the next move ahead of dividend annunciation.
The investors are waiting for listed companies to announce dividends next month to make their next move—especially when banks made handsome profits last year.
Vertex International Securities, Advisory and Capital Markets Manager, Ahmed Nganya, said a decline in volume was counterbalanced by an increase in prices pushing weekly turnover up.
“We expect a bit of price volatility next week as investors are somewhat unsure which bold move before dividend announcements,” Mr Nganya said yesterday through the firm’s weekly market review.
Domestic equities recorded a slight recovery in performance last week, echoing the Vertex International forecast.
“The rally seen on the two banks (CRDB and NMB) since the beginning of the year seems to have reached a halt as investors await dividend announcements in April,” Alpha Capital Head of Research and Financial Analytics, Imani Muhingo said.
Additionally, the equity market witnessed a 17 per cent increase in turnover to 592m/-, primarily driven by a satisfactory performance from domestic stocks.
Orbit Securities said the strong fundamentals of domestic listed companies had sparked an uptick in local investor participation in the market.
“This led to a marginal increase of 7.5 points in the Tanzania Share Index (TSI),” Orbit Securities said in its weekly market synopsis yesterday.
These investors are optimistic about receiving substantial dividend payments during the upcoming dividend payment season, usually between June and August.
“This has further heightened the appeal of the domestic market, as investors look to capitalise on the potential returns,” Orbit said.
The domestic market cap remained resilient, buoyed by strong performances from domestic listed stocks.
Currently, the domestic market cap went up 0.18 per cent to stand at 10.7tri/- at the end of last week.
Tanga Cement was the top gaining counter last week closing at 1,100/-, after going up by 10.00 per cent, followed by NICO increased by 3.95 per cent to 395/-, and DCB Bank rose 3.13 per cent to 650/-. DSE was the top losing counter closing at 1,700/- after a drop of 2.30 per cent.
CRDB Bank was a top market mover last week, claiming 65.27 per cent of total market turnover followed by NMB Bank with 19.69 per cent and Tanga Cement with 4.65 per cent.
Foreign participation in DSE was still limited, similar to a recent trend, as central banks across the world are still trying to curb inflation.
DSE’s foreign investments into listed equities during the week only accounted for 0.33 per cent of the total investments while foreign divestments accounted for 2.62per cent, realising a weekly net foreign outflow of 13.6m/-.
Analysts had it that foreign participation was still expected to be on the low side in the near future as the US Federal Reserve
Chairman attested to possible sustenance of a steeper rise of interest rates as US employment numbers and pace of salary raise last month came in stronger than expected, which daunts the fight against stubborn inflation.
This news is already sending shocks to equities, leading to a 1.5 per cent decline in the S&P 500 on the same day of the testimony.
The US yield curve has already reached the deepest inversion since 1981 as investors prefer long-term fixed income securities from other forms of investments, which is one of the early signs of a pending recession.