THE overall trading of Dar es Salaam Stock Exchange (DSE) is expected to pick up from the second quarter of this year after a long bearish spell, according to a brokerage firm.
The bourse has been trading at a slowdown trend throughout last year and this year’s first quarter.
Orbit Securities’ Financial Markets Q uarterly Report attributed the market uptick to mostly base on the prospects of local pension funds fully resuming investment activities after the restructuring that engulfed the sector last year.
“…And equity market prices having fallen to attractive levels that would make multiples hard to pass by value long term investors,” the report said.
The report said a close example is from the Nairobi Securities Exchange (NSE) which fell by 15 per cent last year and multiples became hard to ignore, leading to increased foreign investors’ flow into the market since February.
“Due to market inefficiency, DSE fell slower than anticipated relative to other markets in Sub- Saharan Africa making DSE relatively unattractive to foreign inflows compared to other markets in the region,” it said.
However, as listed companies increase profitability, interest in the market will eventually pick up, especially now as DSE is a fully approved member of the World Federation of Exchanges (WFE).
The bourse, should all go as planned, is looking at a possibility of an upgrade from unclassified market to a frontier market by FTSE Russell by September.
Orbit said it believed that both “milestones will highly improve visibility for DSE” to the world financial markets spectacles.
The report said despite last year being relatively dull on the market with declining turnovers and indices, most companies saw improving business performance and growth in revenues and profits.
Generally, Tanzania Share Index (TSI) lost 5.8 per cent last while the All Share Index (DSEI) lost 15 per cent. The report showed that the domestic bearish trend remained during quarter one of this year TSI lost 6.0 per cent while DSEI marginally gained 0.9 2 per cent.
“The gain on DSEI is a result of cross listed counters climbing subsequent to a renewed foreign interest in the Kenyan capital market following attractive multiples due to a significant decline last year”.