Turnover slump masks resilient DSE valuation

DAR ES SALAAM: THE Dar es Salaam Stock Exchange has posted a mixed performance, as a steep decline in turnover and trading volumes pointed to weakening liquidity.

However, rising market capitalisation and gains in key counters signalled underlying resilience in equity valuations for the week ending last Friday.

The market data show that the market turnover fell by 64.7 per cent to 10bn/-, down from 28.4bn/- in the previous week, pointing to a slowdown in liquidity.

The decline was accompanied by net foreign outflows of 5.7bn/-, reflecting continued caution among international investors.

Trading volumes also dropped by 67.38 per cent, signalling reduced participation from domestic players.

Zan Securities Advisory and Research Manager Isaac Lubeja (pictured) said yesterday that despite weaker activity, the equity market showed resilience.

“The sharp drop in turnover and persistent net foreign outflows signal that external liquidity will likely remain constrained in the near term,” Mr Lubeja said.

“As a result, market direction will increasingly depend on domestic institutional investors particularly pension funds and asset managers who are expected to provide underlying support to valuations”.

Total market capitalisation rose by 1.52 per cent to 34tri/-, supported by price gains in several stocks. Domestic market capitalisation increased at a faster pace of 2.49 per cent, suggesting underlying investor confidence remained intact.

Price movements last week were led by MCB, which surged by 56 per cent to close at 2,340/-, driven largely by its recently announced rights issue.

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Gains were also recorded in SWISS and TBL, whose share prices rose by 11.97 per cent and 9.62 per cent respectively, following dividend announcements that lifted investor sentiment.

“The recent price corrections across mid- and smallcap counters may begin to unlock selective buying opportunities, especially in fundamentally strong stocks,” he said.

However, Mr Lubeja said, upside momentum is likely to remain modest without a meaningful return of foreign inflows. Large-cap, liquid counters such as CRDB bank and NMB bank are expected to continue anchoring trading activity, with investors favoring defensive, dividendpaying stocks amid ongoing uncertainty.

The self-listed DSE counter advanced by 6.1 per cent to 6,610/-, while CRDB climbed 4.04 per cent to 2,830/-, supported by strong first-quarter financial results.

On the losing side, PAL recorded the steepest decline, shedding 12.9 per cent to close at 405/-, amid selling pressure.

MUCOBA fell by 7.75 per cent to 655/-, while TTP and Afriprise declined by 5.17 per cent and 5.03 per cent respectively.

“The [last] week’s performance reflects a market where price gains are being sustained by stock-specific developments, even as overall trading activity remains subdued,” Mr Lubeja said.

Looking ahead, he said, the DSE is expected to remain in a cautious, range-bound phase, as the market continues to adjust to declining foreign participation and subdued liquidity conditions.