Tanzania: Depreciating shilling, power outages slow down activity at DSE

THE relentlessly weakening Tanzania shilling, surging inflation and persisting acute electricity rationing are among the reasons for continuing sluggishness in activities of the Dar es Salaam Stock Exchange (DSE), the bourse's latest weekly report says.

According to the DSE Weekly Commentary, market activity is expected to remain sluggish – as it has been in the past three
weeks or so – until the macroeconomics and related concerns improve, including the weakening national currency.

For instance the shilling is now rated at between Tsh1605 and 1620 to the United States dollar – and there are no obvious indications at all that it will not continue to lose ground in the coming weeks.
Again, inflation has continued to sour, and is now almost reaching double digits!

In the same unfortunate vein, unreliable electricity supplies continue to be a major problem, and are another debilitating factor that is contributing to slow dealings at the bourse. as investors are not sure of their investments.

Largely as a result of such unfavourable conditions, the All-Shares Index (DSEI) dropped by 0.08 per cent, to 1,263.12 points during the week under review.
The Tanzania Shares Index (TSI) depreciated by 0.22 per cent, falling to 1,048.77 points during the week.

However, the week-on-week turnover grew by 67 per cent to Tsh1,999 million.

On the other hand, activity levels were equally flat, with the total volume traded shrinking by seven per cent, to 3,016,121 shares, from the 3,246,263 shares traded last week.

What is perhaps becoming 'usual' is foreign investor participation at DSE. This increased significantly, to a 'net-buy' position of 2,819,107 shares worth Tsh1,841 million – up from the
1,401,500 shares worth Tsh368 million which were traded last week.
Around 91 per cent of the week’s turnover was attributed to foreign investors alone!

Despite the dark mood, however, DSE expects the banking sub-sector counters to remain relatively active during the week, thanks to 'support' from foreign investors.

“Banking and the Financials are likely to record strong activity compared to the other sectors ahead of the close of the first half (of the year. We anticipate modest performance, taking into consideration the negative effects of rising interest rates on their bond portfolios and loan books,” the DSE report asserts.

Last week, the Financials had 2,490,485 shares traded, thus accounting for 83 per cent of the turnover volume of Tsh498.6 million.

Leading activity in the segment was the CRDB Bank, with a turnover of Tsh434.3 million. The stock has remained flat at Tsh180.00 a share for eight consecutive weeks – despite improved foreign demand at the counter!

At the close of business last Friday, the counter had offers amounting to 300,000 shares at a price range of between of Tsh170.00 and 180.00.

During the week, the NMB (National Micro-finance Bank) counter transacted about 77,083 shares, compared with the 774,111 shares traded the previous week.

The stock’s activity during the week represented 2.5 per cent of the total market volumes traded during the week – and three per cent of total market turnover.
The counter's turnover during the week was Tsh64 million.

Foreign investor participation at the NMB counter during the week was for 16,115 shares, representing 21 per cent of the volume and turnover transacted for the week.
In the event, the counter closed the week with outstanding bids
of 173,100 shares at Tsh830.00 apiece; and 8,500 shares at Tsh850.00 apiece.

A total of 735 shares exchanged hands at the DCB (Dar Community Bank) counter for a turnover of Tsh0.7 million. The counter closed the week with bids of 168,300 shares at a price range of between Tsh400.00 and Tsh470.00 each.

For their part, the Industrials had 513,327 shares traded, accounting for 17 per cent of the week’s turnover.
TCC (Tanzania Cigarette Company) moved a volume of 470,926 shares for a turnover of Tsh1,412.78 million.
There was a Pre-Arranged Block Trade at the counter for 468,341 shares transacted at Tsh3,000 per share... The market price for the stock is currently at Tsh2,500.
TPCC (Twiga Cement) transacted a total of 39,202 shares for a turnover of Tsh75.3 million.
Simba (Tanga Cement) moved 2,298 shares worth Tsh4.7 million; while TBL (Tanzania Breweries) traded a volume of 901 shares worth Tsh1.6 million.

The Commercials moved a volume of 12,309 shares at the Swissport counter, for a turnover of Tsh7.8 million. The counter recorded a marginal price improvement during the week, closing the week at Tsh630.00 – up from Tsh620.00 the previous week.