Investors digest financials as market plunges

Activities on the Dar es Salaam Stock Exchange (DSE) slightly decreased for the trading week ending April 28 as the market digests release of Q1 2023 financials from a number of listed companies.

Turnover for the week amounted to 938.12m/-, a decrease of 62 per cent from the previous week. General market was in bearish trend leading to drop in both total and domestic market capitalisation.

The top three trading counters within the week were, CRDB, TCC, and NMB, dominating the market with 46.19 per cent, 44.26 per cent, and 6.58 per cent of the overall market turnover, respectively.

Three domestic counters registered price gains within the week, TCCL/Simba leading the gainers with a 9.8 per cent increase to close at 1,120/- per share, the increase is largely attributed to cautionary notice released by company during the week, disclosing FCC unconditional approval of their ongoing acquisition by Scancem, DCB registered a price increase of 8.82 per cent closing the week at 185/- per share. NICO registered an increase of 1.2 per cent closing the week at 420/- per share.

On the loser’s side, NMB lost 2.25 per cent of its value closing the week off at 3,480/- per share. CRDB slightly backtracking by 1.82 per cent closing the week at 540/- per share, DSE fell by a slight 1.1 per cent closing the week at 1,800/- per share

Total market capitalization slightly fell by 0.11 per cent to 15.57tri/- and domestic market capitalisation fell by 0.53 per cent closing at 10.99tri/-.

Key benchmark indices

  • All Share Index (DSEI) closed at 1,867.18 points decreasing by 0.11 per cent.
  • Tanzania Share Index (TSI) closed at 4,154.18 points decreasing.

Sector Indices

  • Industrial & Allied Index (IA) closed at 5,085.27 points, up by 0.11 per cent.
  • Bank, Finance & Investment Index closed at 4,242.98 points, down by 1.92 per cent.
  • Commercial Services Index closed at 2,161.21 points, remained unchanged from previous week.

 

Debt Market

Primary market

On Tuesday 25th April 2023, the Central Bank was in the market offering 146bn/- to investors for a new 2-year Treasury bond offering a 7.6 per cent coupon rate annually.

This auction was catered for investors with more preference for short-term papers.

The auction was subscribed by 108 per cent, receiving bids totalling 157.05bn/-, the central bank accepted bids totalling 154.25bn/- preventing aggressive bids in deep discounts.

Being only the second 2-year auction since the start of the year, demand in this auction increased receiving subscription of 108 per cent relative to the previous auction held in January which was subscribed by only 76 per cent.

The stop rate has gradually been lowered to 96.177 from 98 in August last year underscoring continuing lessened monetary policy accommodation.

Average yields have been also increasing in the same period reflecting the central bank’s policy stance. The weighted average yield to maturity lost 24.71 basis points however compared to the previous auction despite the minimum price being lowered to 96.177 from 96.2177 in the last auction held in January.

 Secondary market

No significant primary debt issue within the week warranted liquidity absorption inevitably driving secondary trading activities upwards. The overall turnover for the trading week ending April 28 increased by 56 per cent from 20.74bn/- registered in the previous week to 52.40bn/-. Moreover, number of trades increased from 31 trades recorded in the previous trading week to 40 trades.

Overall tenures traded were predominately on the long end of the of the yield curve, the off-the-run 15 year accounting for 53.59 per cent of the traded volume.

No corporate bonds were traded within the week

We expect trading activities to slightly increase next week.

Outlook

Domestically, a solid start to earnings season will be put to the test in the week ahead as the market trends cautiously optimistic taking a wait and see approach.

CRDB, SWISS, NMB, TCC led the busy earnings week. Broadly we expect a slight upside in light of dividend expectations.

CRDB’s relatively weak Q1 bottom-line will be offset by its hefty dividend, we further project the counter could register a slight upside.

Confirmation of NMB’s dividend will propel the stock upward ultimately driving the domestic market capitalization back to the 11tri/- region.

Fixed income activities next week will be slightly elevated, as the market adjusts positions ahead of the 25year Treasury bond auction scheduled for 10th May 2023.

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.

Globally, the colour is still disarrayed between more hikes and recession. Central banks are expected to take a pragmatic approach in regards to interest rates hikes.

Investors will be attentive towards the Federal Open Market Committee (FOMC) statement, which will be announced on May 3, while the ECB will announce its interest rate decision on May 4.

Macroeconomic numbers will keep the market mood subdued in the near term.

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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