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Foreign investors’ participation on Dar Exchange rises

FOREIGN investors were net sellers during the week that ended on 26th February 2021 as a load was traded on the TBL counter. TBL saw zero transactions for the better part of the week, until Friday when a prearranged block of 491,409 shares was traded at a price of 5,000/- per share.

The block was sold by foreign investors and bought by locals, hence raising foreign participation to 94.43 per cent on the selling side.

The net outflow during the week was $1.06mln. Locals accounted for 99.82 per cent of the total investments. The total equity turnover for the week amounted to TZS 2.6bln ($1.13mln), which was 278 per cent higher than the previous week, thanks to the prearranged transaction on the TBL counter.

TBL accounted for 94 per cent of the total equity turnover for the week while CRDB and JATU followed with 2.8 per cent and 2.1 per cent respectively. Activities on the CRDB counter slightly lowered as the market finds its footing with the circular by the Bank of Tanzania.

The average trading price for the bank has been lower than the official closing price but due to lowered activities on the counter, the volume has not been enough to alter the price. CRDB has moved 347,463 shares during the week, realizing a weighted average price of 208.77/- for the week while the official closing price is still 220/-. The price of JATU is now finding its balance between 1,800/- and 2,000/-.

The counter moved 29,395 shares during the week, while the weighted average price realized was 1,898.74/-. The price was still bullish at the beginning of the week and took an about turn on Wednesday to end the week on a bearish mode. The counter entered the week at 1,720/- and closed the week at 1,860/-. The net appreciation was 9.3 per cent. Both indices faced down during the week under review as prices were retreating.

The Tanzania Share Index (TSI) lost a 0.44 point as a result of a decline of the price of DSE. DSE traded 16,076 shares, realizing a weighted average price of 1,072.6/- while closing the week at a price of 1,040/- from the previous week’s 1,100/-. The decline on the DSE counter was enough to offset the appreciation of JATU, for the TSI to close on a net bear.

The All Share Index (DSEI) also lost 9.62 points following a decline of the giants, East African Breweries (EABL) and KCB Bank (KCB) by 1.13 per cent and 2.41 per cent respectively. National Media Group (NMG) rose by 24.07 per cent following the news of a share buyback programme announced by the company during the week.

The company announced that it’s looking to buy back up to 10 per cent of its shares listed on the Nairobi Stock Exchange. Usually a buyback programme indicates confidence a company has on its prospects relative to the valuation of its shares on the open market.

When a company believes its shares are undervalued, the company may opt to buy back the shares at market prices, and the news usually props up the prices of the company in question. The buyback news comes two weeks after NMG launched a premium section of its digital platform Nation.Africa, where consumers shall access exclusive, in-depth and analytical content for a fee.

NMG initially launched the digital platform in August 2020, and now has launched the premium section. Given the news and the announced share buyback programme, NMG is displaying confidence on the future of the company. It is believed that, the bullish trend of the U.S market on the better part of the last 10 years is on the back of share buyback programmes.

Late last year Dangote Group announced that they will be buying back up to 10 per cent of its shares, and has now already bought about 0.4 per cent. The DSEI at the end of the week stood at 1,844.09 points while the total market capitalization was TZS 15,320.86bln ($6.63bln).

The TSI closed the week at 3,508.81 points and correspondingly the domestic market capitalization dropped by a marginal 0.012 per cent to a total of TZS 9,225.45bln ($3.99bln). Market, Bills and Bond The week had only three reported trading sessions on the Interbank Cash Market (IBCM), similar to the previous week.

The total value of transactions for the week fell by more than half while the interbank rate plunged, indicating tightening liquidity in the banking sector. The total weekly transactions amounted to TZS 18.9bln ($8.18mln). The interbank rate went up by 100bps to 4.5 per cent.

Currency Market The value of transactions on the Interbank Foreign Exchange Market (IFEM) went up by 11.8 per cent to a total of $4.46mln as the shilling held ground.

The shilling maintained resilience with a slight appreciation by a pip. The shilling has already depreciated by more than 25 pips since the second week of January, which was the last week with weekly transactions above $5mln.

The weighted average exchange rate during the end of the week under review was TZS 2,309.97/USD

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Author: ORBIT SECURITIES

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