Outlook for Tanzania’s equity market to remain positive in coming weeks

Tanzania’s equity market outlook is expected to remain positive in the coming weeks driven by favorable economic environment supported by solid corporate earnings according to market analysts.

According to the Zan Securities Chief Executive Officer Raphael Masumbuko, while challenges and risks persist, investors should focus on sectors with strong growth prospects and companies.

“We anticipate a forthcoming shift in investor preferences towards fixed income securities as several counters enter the ex-dividend period,” he said.

The transition is projected to gather momentum, particularly due to the central bank’s implementation of a less accommodating monetary policy, leading to an upward trajectory in fixed income yields.

The Bank of Tanzania (BoT) is expected to maintain less accommodative approach in the near term, prioritizing keeping inflation low.

Masumbuko said the prevailing market sentiment is characterized by cautious optimism, with investors closely observing global economic dynamics and potential shifts in policies.

“While worries regarding inflationary pressures and geopolitical tensions have eased somewhat, uncertainties still linger. Looking at the year-to-date performance, the market capitalization of the Dar es Salaam Stock Exchange (DSE) has experienced a decline of 3.3 percent, primarily driven by the devaluation of cross-listed stocks,” he said

He however, the domestic market capitalization has shown consistent growth, recording a 6.4 percent increase since the beginning of the year.

In the stock market, sectors such as Banking, Finance, and Investments are displaying robustness and presenting potential investment prospects.

 Year-to-date, the Banking Finance and Investment Index (BI) has delivered a commendable return of 19.2%.

A significant portion of this gain can be attributed to the price appreciation of key stocks like CRDB and NMB (up YTD by 26.58% and 15.23% respectively).

“The upcoming earnings season is expected to be robust, with many companies reporting strong financial results. Key sectors to watch include Banking, Finance, investments (BI) and Industry, allied (IA). Nevertheless, risks remain including supply chain disruptions and fx  turbulences which could slightly take the wind of sails,” Masumbuko added.