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Uganda: Uganda Clays Limited, Safaricom Set to Raise Market Liquidity
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The Monitor (Kampala)
29 April 2008
Posted to the web 29 April 2008
Martin Luther Oketch
Kampala
Players in the financial market are optimistic that the liquidity level in the capital market within the East African region is set to make record progressive increases.
This follows the issuance of an additional four million shares by Uganda Clays Limited listed on Uganda Stock Exchange and the 10 billion Safaricom IPO shares now afloat in the region.
"Now that the stock exchanges in the region are well linked with each other we expect increased activities in the secondary market, which will definitely improve the liquidity level.
Liquidity is going to improve in our capital market," General Manager of Dyer and Blair Mr Njoroge Ng'ang'a told Business Power.
As more tradable instruments get listed on stock markets across the region it will be easier for investors to easily convert their shares into cash and vice versa as well as offer exit strategy, portfolio diversity, and flexibility of asset allocation.
On April 24, Uganda Clays Limited listed an additional four million shares on Uganda Securities Exchange by way of a Rights Issue, bringing the total number of UCL shares listed on USE to nine million shares.
Mr Njoroge said the decision by UCL to list additional four million shares on the USE through a Rights Issue will increase the number of shares to shareholders as well as spur more activities in the secondary market.
Mr Njoroge said the opening up of the stock market to foreign investors would certainly promote foreign direct investment in the East African region.
It is anticipated that the liberalisation of capital flow across countries will increase stock market liquidity, further accelerating economic growth.
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"Technically speaking market segments in the region is improving the adding of more shares on USE by Uganda Clays through right issue is very significant. Safaricom IPO of 10 billion shares has brought in a very big impact in East African capital market; because the shares are many and most people are expected to get share allotment," he said.
Currently most financial markets in Africa are constrained by limited liquidity, market players. Mr Njoroge however noted that the issuance of more UCL shares could cause a price meltdown because unless the current supply is matched by adequate demand.
The four million additional UCL listed on USE opened with prices value of Shs6,920 per share and closed at Shs7,000 per share with a total of 509 traded on UCL counter.
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