Foreign investors’ no-show fails stock market


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Sep 4, 2011
By BUSINESS STANDARD Reporter, 12th September 2011 @ 12:15, Total Comments: 0, Hits: 29

ABSENCE of foreign investors impacted heavily on the level of trading at the Dar es Salaam Stock Exchange (DSE) market last week, leading to a significant decrease compared to the previous period.

Once again, the week ended up without participation of foreign investors amid slow recovery from credit crunch turbulence in the Euro zone and the US. “Foreign investors are yet to regain enough liquidity to invest back into the emerging markets,” said Mr Joel Nkya, an analyst with the Tanzania Securities Limited in a weekly commentary on the DSE activities.

Also the decrease in the level of activity was nominal as the turnover last week was mainly contributed by a single pre-arranged deal on the Tanzania Breweries Limited (TBL) shares.

The bourse, according to the report, recorded a turnover of 243m/- down from 1,623m/-, a decrease of 568 per cent after a sale of 270,001 shares, a decrease of volume of 129 per cent last week. Both DSE All Share Index (DSEI) and Tanzania Share Index (TSI) edged up as a result of gain in prices of Simba, TBL and Swissport, said the report.

The DSEI closed the week at 1,283.77 points, an edge up of 4.76 points. The TSI on its part closed the week at 1096.52 points, a gain of 11.01 points compared to the end of the period before. In the banking finance and investment sector, the counter recorded improvement in activity as CRDB made a comeback after a week of poor performance in the week before.

The sector as per the report, contributed to 33 per cent of the market’s weekly turnover and 64 per cent of the total weekly volume. The Dar es Salaam Community Bank (DCB) led he counter with a turnover of 37m/-, equal to 15 per cent of the market’s weekly turnover.

The NMB and CRDB recorded turnovers of 28m/- and 18m/-, contributing to 11 per cent and 6 per cent of the markets’ trading respectively.

The CRDB led in the volume of shares traded by contributing 31 per cent of the total market turnover, followed by DCB and NMB with 23 and 12 per cent respectively. In the report, the stock value in the sector remained flat with investors’ bids, thus showing reluctance to buy them at premium prices.

The industrial sector recorded a decrease in turnover and volume in comparison to the previous week but maintained a leading role, contributing 61 per cent of the markets total turnover and 27 per cent of the volume, ranking it second in terms of trading volume to the banking sector.

Twiga recorded a turnover of 104m/-, 43 per cent of the total turnover at the bourse and 18 per cent of the total market volume of shares traded. The increased activity at the counter may have been sparked by the interim dividend announcement early last week.

The low interim dividend yield of around 2 per cent might have compelled investors to sell their shares. But the long term investors were readily waiting to buy the stock considering the prospects of the company and construction industry. The stock price remained flat at 2,060/- during the week.

Simba, TCC and TBL added up to 18 per cent of the total turnover. The TBL and Simba saw their stocks appreciating. The TBL share price rise might have been contributed by investors who want to take a long position on the stock so as to benefit from the expected rise in price after the coming mini IPO.

At the IPO the stock will sell at a margin not exceeding 15 per cent of the market price of the time. Since the TBL shares are undervalued, the stock would most likely be sold at the ceiling margin of 15 per cent. Simba share price rose by 60 which is 2.6 per cent from 2,300/- to 2,360/- while TBL shares rose by 60/- which is 3.3 per cent from 1,820/- to 1,880/-.

In the commercial sector, the Swissport contributed to 7 per cent of the market’s turnover. This was greatly fuelled by the persisted investors confidence on the company contributed by great past financial performance especially.

The stock saw its price rise by 20/- which is 2.8 per cent from 710/- the period before to 730/- last week. However, looking into the next week, the market outlook indicate some activity at the Swissport counter as there are outstanding bids at a price higher than the market price.

Twiga and Simba counters are expected to record moderate activities as speculators may continue taking advantage of the appreciation of the stock. The banking sector is expected to contribute to a significant amount to the coming week’s turnover as investors who are optimistic may buy some of the easily available NMB and CRDB stocks.

source:Daily News | Foreign investors’ no-show fails stock market
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