Equity market
TRADING activities on the Dar es Salaam Stock Exchange (DSE) registered reduced activities for the trading week ending June 2nd. The total turnover for the week reached TZS 921.11 million, marking a decrease of 81.23 per cent compared to the previous week.
The overall market exhibited mixed sentiments, resulting in growth in the total market capitalisation and slightly fall in the domestic market capitalisation.
Among the top trading counters for the week were TCC, CRDB and NMB, dominating the market with 51.03 per cent, 17.88 per cent and 13.90 per cent of the total market turnover, respectively.
Notably, pre-arranged deals involving 78,340 TCC shares were executed at an average price of TZS 6,000 per share, significantly contributing to the overall turnover for the week.
During the week, two counters experienced price gains. NMB led the gainers with a notable increase of 4.6 per cent, closing at TZS 3,640 per share. SWISS also observed a gain of 2.67 per cent per share, finishing the week at TZS 1,540 per share.
On the losing side, TCCL backtracked by 9.47 per cent ending the week at TZS 1,720 per share, CRDB continues to decline as its shares trade ex-div falling by 8 per cent to reach TZS 460 per share. DCB lost 2.7 per cent closing the week off at TZS 180 per share.
In terms of market capitalization, the total market capitalization rose by 0.16 per cent to TZS 15,193.38 billion, while the domestic market capitalisation decreased by 0.31 per cent, reaching TZS 10,901.61 billion by the end of the week.
All Share Index (DSEI) closed at 1,821.99 points increasing by 0.16 per cent.
Tanzania Share Index (TSI) closed at 4,120.50 points decreasing by 0.31 per cent.
BoT issues directives on foreign exchange operations
The Bank of Tanzania (BOT) released a directive on foreign exchange operations in the country last week. The directive requires transactions exceeding USD 1,000,000 must be conducted through banks at prevailing market prices. Transactions by a single customer in a day will be aggregated to determine this amount.
The directive also restricts trading with unregistered international currency traders and requires currency dealers to follow procedures for recording customer information. Additionally, all Letters of Credit (LCs) for transit cargoes must be funded using foreign exchange obtained from the respective destination countries
Impact:
The intervention aims to cushion effects of foreign exchange supply constraints. As much as the current forex tightness within the region are structural, policy intervention will give a breathing room for the market.
BoT shift Yetu Plc assets to NMB.
The Bank of Tanzania has transferred the assets and liabilities of Yetu Microfinance Bank to NMB Bank. Yetu was suspended from trading on the Dar es salaam Stock Exchange after it was placed under the administration of the Central Bank last December to determine the best resolution to its regulatory challenges. Depositors and other creditors of Yetu Microfinance will be advised in due course how and when they will commence accessing banking services through NMB.
Impact:
The regulatory measures undertaken by the Central bank has shown their efforts to protect the interests of depositors and creditors and maintain confidence in the banking sector given its importance to the financial market. Since, creditors and depositors have more priority on the company’s net assets than the shareholders, we are yet to see the fate of the shareholders of the company.
BoT releases Monetary Policy Committee Statement
The Monetary Policy Committee (MPC) meeting was held on 22nd May 2023 and the MPC noted with satisfaction the sustained implementation of a less accommodative monetary policy that succeeded in containing inflation within the target while ensuring an adequate supply of liquidity. Given the domestic and global economic conditions, the MPC approved the Bank of Tanzania to sustain the implementation of less accommodative monetary policy in May and June 2023.
Primary Market
On Wednesday 31st May 2023, the Central Bank was in the market offering TZS 103.41 billion to investors for a new 10-Year Treasury bond offering a 10.25 per cent coupon rate annually.
The auction was subscribed by 37.1 per cent – the auction received bids totaling TZS 38.36 billion and accepted bids worth TZS 34.54 billion.
The weighted average yield to maturity climbed 16.72 basis points relative to the previous auction held in early February this year from 11.0548 per cent to 11.222 per cent. Yields have edged higher over the last four auctions gaining 76.73 basis points from the average yield in September 2022. Moreover, the price floor has been lowered to 92 from 97 over the same period. This continues to reflect lessened monetary policy accommodation by the central bank to maintain inflation within the target.
Despite the price floor currently standing at 92, which is the lowest as compared to all other tenures, the 10-yr bond still receives low subscription since most investors have more preference for longer tenures such as the 20-yr and 25-yr maturities which have relatively higher average yields thus driving more demand in those tenures.
Secondary Market
Market activities fell relative to the preceding week, however still registering above average weekly trades. Total turnover for the trading week concluding on June 2 fell by 46.97 per cent, falling from TZS 181.52 billion in the previous week to TZS 96.24 billion. Equally, the number of trades decreased from 48 trades in the previous trading week to 47 trades.
The majority of the traded securities had longer tenures, particularly focusing on the on-the-run 20-year and 25-year bonds issued this year, which accounted for a substantial 73.96 per cent of the total trading volume.
On the other hand, corporate bond activities were slightly elevated, registering a total of two trades with aggregate notional value of TZS 45 million traded at average prices of 92.5.
Looking ahead, we anticipate that secondary trading activities will continue to remain elevated in the forthcoming weeks as we reach the end of Quarter 2.
During the week benchmark indices recorded a mixed trend breaking previous weeks uptrend. Tanzania Share Index (TSI) decreased by 0.31 per cent to close the week at 4,120.50 points from 4,133.41 points while the All-share index (DSEI) increased by 0.16 per cent to close the week at 1,821.99 points from 1,819.11 points. We expect the TSI to further shed a few points in the coming weeks as counters such as NMB exercise their book closure.
However generally prevailing market sentiment is characterised by optimism, with AGM’s hosted last week cemented investors’ confidence in companies as they communicated their positive strategies to investors.
Looking at the year-to-date performance, the market capitalisation of the Dar es Salaam Stock Exchange (DSE) has experienced a decline of 3.2 percent, primarily driven by the devaluation of cross-listed stocks.
However, the domestic market capitalisation has shown consistent growth, recording a 6 percent increase since the beginning of the year.
