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Dar exchange register slowest week of the year

THE market has experienced the slowest week of the year, in fact, the slowest week in almost ten years, as the market marks barely a month since the new trading rules became effective and drastically affecting market transaction on the largest counters especially TBL, which usually command more than 70 per cent of market activities.

The week saw a decline of the total equity turnover to 81.66m/- (0.036 million US dollars) marking a more than 98 per cent decline week on week.

The turnover was realized from a total of 561,782 shares of which more than 91 per cent of the shares were traded on the CRDB counter.

The decline in turnover can be attributed to the silence on large cap counters especially TBL after the new trading rules raised the lower limit of the counter’s price.

CRDB Bank Plc (DSE: CRDB) accounted for 63 per cent of total equity turnover, emerging as the top mover during the week while TBL accounted for a mere 0.2 per cent of market activities.

The next top mover was Twiga Cement Plc (DSE: TPCC) which moved 8,784 shares, accounting for 23 per cent of the total equity turnover.

The Tanzania Share Index (TSI) remained stagnant for a second week in a row at 3,291.83 points while the domestic market capitalization stood at 9.065tri/- (3.94 billion US dollars).

The stagnancy of the TSI depicts reduced activities and illiquidity in the market as the primary job of a stock exchange is to determine a fair value of equities through demand and supply, the reason prices are always in motion.

The All Share Index (DSEI) on the other hand lost 21.66 points to close the week at 1,924.56 points as a result of a 1.11 per cent decline in the total market capitalization due to a retreat in price on Acacia Plc (DSE: ACA) counter.

Acacia was the biggest loser during the week, falling by 4.79 per cent and considering the counter’s weight on the market it was bound to shake the DSEI.

Other cross listed counters that decelerated were East African Breweries Ltd (DSE: EABL) by 1.4 per cent and KCB Bank (DSE: KCB) by 1.12 per cent while Jubilee Holdings Ltd (DSE: JHL) climbed by 1.24 per cent and Kenya Airways, Nation Media Group and Uchumi Supermarket all remained constant.

The total market capitalization closed the week at 18.96tri/- (8.25 billion US dollars) from previous week’s 19.18tri/- (8.34 billion US dollars).

Money Market, Bills and Bonds Transactions on the Interbank Money Market (IMM) have slowed down for the third week in a row, this week by 25per cent to report a total of 52.65bn/- (22.89 million US dollars) compared to 70.6bn/- (30.69 million US dollars) traded during the previous week.

Interbank rates were not left behind as they eased with the volumes. The interbank rate closed the week at 5.1 per cent, down 19bps from 5.29 per cent recorded at the end of the previous week.

The Bank of Tanzania (BoT), on behalf of the government, issued Treasury bills worth 107.2bn/- (46.6 million US dollars) on a Treasury auction held on the 04th of September 2019 while 94.7 per cent of the offer was the 364 days tenor.

The market oversubscribed the offer by 96 per cent with a tender size of 210.55bn/-(91.52 million US dollars) from 79 bids while 99.7 per cent of the tender size from 75 bids fetched the 364 days tenor.

The Bank accepted a total of 102.15bn/- (44.4 million US dollars) from 50 bids. The accepted amount is 95 per cent and 49 per cent of the offer size and tender size respectively.

The total weighted average yield to maturity (WAYTM) for Treasury bills has been on a downward pattern falling for the past seven consecutive auctions, from 8.79 per cent mid-June to 7.24 per cent during the auction under review.

Auction to auction, the WAYTM dropped 20bps from previous auction’s 7.44 per cent.

Currency Market The Interbank Foreign Exchange Market (IFEM) began the month on a slow pace as the volumes traded declined by 14 per cent to record a weekly total of 40.32 million US dollars from previous week’s 46.7 million US dollars.

The shilling subsequently stabilized against the greenback during the week, gaining back 25 pips to close the week at a weighted average exchange rate of TZS 2,300.50/USD.

The shilling has been stable since mid-2019 when foreign exchange liquidity had stabilized in the banking sector after the central bank intervened in the market to provide sufficient liquidity, a move that ate up a significant chunk of foreign reserves.

Liquidity is currently stable as the central bank is mopping out excess liquidity from the banking sector while piling up foreign reserves.

A report by the Bank of Tanzania has shown that foreign reserves have grown to 5.2 billion US dollars up to the end of August from 4.4 billion US dollars during June 2019.

orbit@orbit.co.tz; imani@orbit.co.tz

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Author: Weekly Markets Synopsis

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