The Tanzanian stock market ended 2022 on an impressive note amidst global instabilities with domestic markets swimming against the global tides characterized by sharp bounce back for stocks.
This is despite the fact that the global economic landscape was confronted with turbulent headwinds, arising substantially from the Russia-Ukraine war.
Globally the year 2022 was projected to be a year of recovery and growth, Central monetary authorities easing monetary conditions to support strong post pandemic recovery.
The bullish sentiment was however short lived as Russia’s invasion of Ukraine quickly deteriorated market conditions with a runaway inflation posing risks to financial markets globally.
According to the Dar es Salaam Stock Exchange data, the Tanzania domestic share index (TSI) gained 323 points (9.08%) Y/Y, although the All share index (DSEI) lost15.51 points (-0.82%) Y/Y largely due to a negative price movements of a number of cross listed counters.
But earlier this year, the IMF projected a rather gloomy economy in 2023 as the main engines of global growth — the US, Europe and China — all experience weakening activity.
Stock market analysts are however bullish on the prospects of the Tanzania’s stock market this year.
According to the Zan Seurities Chief Executive Officer (CEO) Raphael Masumbuko, the domestic market sentiment remains relatively neutral.
‘We understand equity markets are in a positive trajectory. Like in 2022, in our view, the domestic recovery of the economy and GDP growth will subsequently make companies relatively more profitable, equity prices are likely to increase in Q2 (2023) as companies begin to disclose their audited financials for the year ending 2022,”
Masumbuko added, “We expect a grind-it-out market environment in which valuations could remain flat or slightly decline but with profit growth to supersede this and Equity outperformance to continue,”
But Imani Muhingo the Head of Research and Analytics at Alpha Capital equally shared the same sentiments urging that abeit fears of a global recession in the first half of 2023, the Tanzanian capital markets will have an outstanding year attributed to strong performance from the banking sector.
“We expect more than 50% growth in dividends from the two largest banks, CRDB and NMB, which shall be a significant boost in the banks’ prices hence the TSI. We expect to see increased local participation, as well as a revival of foreign investors when the global economy stabilizes, which shall be a further boost to prices and indices,” he said.
The Tanzania Share Index (TSI) rose by 9.1% in 2022 compared to 2.9% in
2021 with the growth being equivalent to investors’ paper wealth gain of 853.17bn/- in one year.
The rise was driven by the financial services companies including NMB, CRDB and DSE, which saw prices go up by 51%, 41% and 31% respectively, resulting from impressive business performance during the year.