The stock market registered relatively low activities for the trading week ending March 3rd.

Turnover for the week amounted to 506.42m/-, a fall of 53.23 per cent from the previous week, a number of stocks experienced price fall leading to the overall decrease in market capitalisation. Total market capitalisation slightly fell by 0.53 per cent.

The top three trading counters, CRDB Bank, NICO, and NMB Bank, dominated the market with 57.86 per cent, 16.86 per cent, and 14.97 per cent of the overall market turnover, respectively.

Investors can take comfort in the continued optimism in the market and the potential for growth in the future.

Counters reported downward price trends unlike the mixed performances in the previous week. No gainers were recorded during the trading week.

NICO suffered a 3.8 per cent decrease in value, closing the week at 380/- per share. TICL closed at 140/- per share marking a fall of 3.45 per cent in value. CRDB closed at 445/- per share marking a fall of 1.11 per cent in value.

Total market capitalisation went down by 0.53 per cent to 16.026tri/- and domestic market capitalisation went down by 0.13 per cent closing at 10.683tri/-.

Key benchmark indices
• All Share Index (DSEI) closed at 1,923.02 points decreasing by 0.53 per cent.
• Tanzania Share Index (TSI) closed at 4,041.47 points decreasing by 0.13 per cent.
Sector Indices
• Industrial & Allied Index (IA) closed at 5050.02 points, unchanged from the previous week.
• Bank, Finance & Investment Index closed at 3,854.77 points, down by 0.47 per cent.
• Commercial Services Index remained unchanged at 2,145.21 points.

Market news round up
CRDB was recently named the best SME bank in the country by Global Finance during the annual SME bank awards held in London this year. There were other five banks from Africa, and CRDB was the only one from East and Central Africa to have been named. This recognition shows how the CRDB has increased its effort in supporting micro, small, and medium-sized enterprises across the country. Thus, such milestones may attract potential investors.

Vodacom’s CEO promises shareholders a bright future following an interview done by The Citizen Newspaper. The telco plans to work very hard to make sure that they create value for shareholders and ultimately be able to return to paying dividends. While also accepting competition that is looming under the surface in the face of Tesla and their starlink satellite, which are being heavily linked with Tanzania. The CEO took it as a chance for Vodacom to grow and outweigh the new rival. He also talked about new sources of revenue that Vodacom is pursuing, which in return generate more profit for the company and possibly shareholders. This news will hopefully increase demand in the market for Vodacom shares.

Debt Market
Primary market
During the week on March 1, the Bank of Tanzania (BoT) auctioned a 25 year Treasury bond in the face of high long term debt demand. As it was expected the auction over-subscribed, bids totalling 410bn/- were received compared to 180bn/- offered by BoT, equivalent to 227 per cent subscription rate.

There was a general decline in the BoT’s acceptance rate for this auction relative to other long term debt issues, the acceptance rate stood at 63 per cent, this being its continuous attempts to find a balance between financing the government’s fiscal deficit and managing the maturity profile of public debt.

Overall the 25 year registered a slight uptick in average yields to maturity adding 20.53 basis points, reaching 12.9606 per cent. We further expect a slightly upward pricing adjustment in the secondary market. Further causing the yield curve to edge upwards on the mid to long end of the yield curve.

Secondary market
Trading activities decreased for the trading week ending March 3. Overall turnover for the week decreased by 64.6 per cent from 134.58bn/- registered in the previous week to 47.85bn/-. More so number of trades decreased from 50 trades recorded in the previous trading week to 36 trades.
Overall tenures traded were predominately on the long end of the yield curve, with the off-the-run 20 year accounting for 66.17 per cent of the traded volumes.

Activities in the corporate bond segment only included NMB bonds with an aggregate face value of 13m/- traded at average price of 90.9987.
A comparison of average yields on the DSE year to date shows an increase in yields across the curve. Factors alluding to that include increased budgetary financing pressure resulting from revenue shortfalls with the BoT borrowing aggressively in the domestic debt market.

Inflation concerns keep the BoT on high alert reducing accommodative monetary policy as cited in the previous MPC communiqué. Further, compelling with investors bidding higher to maintain positive real return on capital invested.

We expect the yield curve to continue shifting upward in 2023 on account of the aforementioned factors.

Entering the final month of Quarter 1 of 2023, the outlook for the stock market remains optimistic, driven by strong performance of several stocks year-to-date and overall stock market indices reaching four-year highs. However, investors should also be mindful of rising fixed income yields due to higher demand for risk premiums from government lending, prompted by creeping inflation and tight fiscal positions. Despite these headwinds, the stock market has remained resilient, and there are several reasons to remain positive about its prospects.

In Tanzania, several sectors of the economy, including manufacturing, banking, and consumer discretionary, have performed exceptionally well in recent months and are expected to continue driving growth.

In conclusion, while the stock market may face short-term headwinds in the form of rising fixed income yields, the overall outlook remains optimistic. Overall, the stock market appears to be in a strong position to deliver healthy returns for investors in the medium to long term.

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