Foreign investors dominate as DSE equity turnover jumps by 121.7 pct to 12.5bn/- in May

Market activities at the Dar es Salaam Stock Exchange (DSE) increase by 121.7% to reach a total turnover of 12.55bn/- in May, primarily driven by prearranged block transactions on the TBL counter.

Available data from the DSE shows that the Tanzania Share Index (TSI) experienced a slight decline of 0.81% in May, primarily due to a 14.81% drop in the price of CRDB, which went ex-dividend during the month.

 TBL accounted for 75% of the total equity turnover, with an average transaction price of 6,000/-, representing a 45% discount from the market closing price.

Notably, foreign investors conducted these block transactions, leading to a significant rise in foreign participation from 40.3% in April 2023 to 85.2% in May.

According to the Alpha Capita Head of Research and Analytics Imani Muhingi, ”increased foreign participation does not necessarily indicate a renewed appetite for foreign investors but rather reflects an isolated case specific to TBL transactions,”

He said that foreign appetite for emerging and frontier markets will resume once global economic uncertainties settle and recessionary fears diminish.

During May, TCCL witnessed a remarkable increase of 69.6% in May, driven by government support for the acquisition deal of TCCL shares between Scancem DA and Afrisam.

Although the deal faced several obstacles from the Fair Competition Tribunal (FCT), the government assured the public that the transaction would proceed after revising the market shares of both companies.

 NMB appreciated by 4.02% in May but went ex-dividend at the end of the month. The stock has not experienced significant price movements since then.

As investors receive dividends from various counters in June 2023, retail investors, in particular, are showing increasing interest in NICOL, which has already appreciated by 23% since the beginning of the year, albeit fell by 4.76|% in May.

NICOL has achieved an annual profit growth of 54% (refer to NICOL Valuation Update – March 2023), and investors anticipate similar growth in dividends. Although NICOL currently lacks a dividend policy, it is expected to propose one during the upcoming AGM, scheduled between September and October. The establishment of a clear dividend policy would contribute to price stability for the company.

Market outlook for June, 2923

According to Imani Muhingo the Alpha Capital Head of Research and Analytics, participation of foreign investors is still anticipated due to ongoing global economic uncertainties and a shortage of USD in the global market.

“Limited activities are expected on the leading counters, CRDB and NMB, after the banks’ dividend payments in June. However, some activities are anticipated on the DSE counter as the AGM approaches and dividend dates are announced,”  he said

Muhingo noted that activities on the DSE counter are typically constrained by a limited supply of shares, and therefore, the level of activity will depend on the availability of shares.

“Significant activity is expected on the NICOL counter as investors shift their focus to the next opportunity after receiving dividends and capturing capital gains from the two largest banks and TPCC. Investors interested in NICOL should be aware of the governance risks associated with the company before making investment decisions,” he added.