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TBL returns to market scene as indices drop 20 points

Stock Market

BOTH indices went down by more than 20 points during the week while the leading brewer, Tanzania Breweries Ltd, returned to the scene with a major transaction that significantly rose the market turnover.

The Tanzania Share Index (TSI) dropped by 25.02 points parallel to a 0.72 per cent decline of the domestic market capitalization. The All Share Index (DSEI) also lost 24.46 points following the total market capitalization sliding by 1.34 per cent.

The TSI and DSEI closed the week at 3,461.84 points and 1,807.50 points respectively while the domestic market cap and total market cap stood at TZS 9,091.25bln ($3.94bln) and TZS 15,006.32bln ($6.50bln) respectively.

The slide of the major indices was a result of price depreciation on six counters, four of which were from the cross listed board. Domestic counters that saw price movement during the week were Twiga Cement (TPCC) and CRDB.

The price of TPCC dropped by 10 per cent to close at 1,980/- during the same week that the cement manufacturer paid a dividend of TZS 290/- per share. There have been news of rising cement prices during the week of which distributors indicate a slight shortage due to increased construction projects by the government.

Twiga Cement’s Head of Marketing was quoted siting increased production costs as the reason. He cited the risen costs as increased prices of gas, fluctuation of the shilling and inflation. Rising cement prices may be a booster for the firm’s revenues and margins if operational expenses would be maintained.

The price of CRDB also fell by 6.9 per cent to close the week at 135/- per share. CRDB held its first virtual AGM on 27th June 2020 and reported an 87 per cent growth in net profits and EPS. The managing director of the bank also cited intentions of international expansion to the DRC after seeing positive results in Burundi.

CRDB traded a total of 4.5mln shares at an average price of 135/- to realize a turnover of TZS 610.72mln ($0.26mln). On the cross listed board, only Kenya Airways (KA) was on the green, defying all the headwinds the airline faces in her operations. KA gained 45 per cent during the week.

Moreover, KA has been suspended from trading by the Nairobi Securities Exchange effective from 03rd July 2020. The move is to allow the ownership restructuring of the airline whereby the government is buying out all other shareholders.

East African Breweries led the losing streak by 5.91 per cent followed by KCB Bank which fell 3.8 per cent. Jubilee Holdings and National Media Group both fell by 3.74 per cent and 3.03 per cent respectively. The market saw a significant week on week growth in turnover, from TZS 471.93mln ($0.205mln) to TZS 5.06bln ($2.19mln) following activities on the TBL and DSE counters.

A total of 7.12mln shares was traded in 91 deals. TBL was the top mover, accounting for 49.4 per cent of the total weekly equity turnover, all of which was realized on Friday 03rd July 2020 after foreign investors disposed 0.5mln shares while local investors bought the whole block at a price of 5,000/-.

TBL was closely followed by DSE which accounted for 36 per cent of the turnover after moving 2.02mln shares at an average price of 899.99/-. Although foreigners dominated the selling side, local investors were still dominant on average of the total market.

Foreign investors accounted for 52.02 per cent of divestments while local investors accounted for 98.79 per cent of investments.

Market, Bills and Bonds

Only one day of transactions was recorded in the Interbank Money Market (IMM) during the week compared to two days during the previous week.

On Thursday 02nd of July 2020 the IMM recorded total transactions of TZS 5bln ($2.17mln) at the interbank rate of 4 per cent. The amount is exactly twice the amount reported during the previous week which ended at an interbank rate of 5.25 per cent.

The Bank of Tanzania offered a 10 years Treasury bond on 01st July 2020, carrying a coupon rate of 11.44 per cent. At TZS 110bln ($47.65mln) the offer size was TZS 10bln ($4.33mln) less than the previous similar auction.

The tender size from the public amounted to TZS 225.58bln ($97.69mln) from 85 bids, marking an oversubscription of 105 per cent compared to 67.8 per cent during the previous similar auction. The Bank of Tanzania accepted only 19 bids worth a total of TZS 80bln ($34.65mln) leaving TZS 145,579.2bln ($63.05mln) on the table.

The successful amount was 27.3 per cent less than the offer indicating the Bank’s motive to lower Treasury yields. The weighted average yield to maturity (WAYTM) was lowered by 87bps to 12.0244 per cent.

Currency Market

The shilling still dwindled during the week, reporting a depreciation of 0.07 per cent equivalent to 162 pips. The shilling stood at a weighted average exchange rate of TZS 2,309.09/ USD as of Thursday 02nd July 2020 in the Interbank Foreign Exchange Market (IFEM).

The total amount traded on the IFEM till the mentioned date was $7.8mln compared to $7.9mln during the previous week.

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

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Author: Weekly Markets Synopsis

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