East African Business Week (Kampala)
Mark Muhumuza
15 November 2009
Kampala — Trading is low at the Uganda Securities Exchange (USE). This is because there are less people investing in stocks.
Since the year began, the National Social Security Fund (NSSF) has not increased its shareholding value at the USE, a source at the USE told East African Business Week.
This absence means that NSSF which holds billions of workers savings and has always been a major player at the USE, has taken the sting out of the once vibrant bourse.
Prices have fallen to low levels that had not been witnessed at 8-year old exchange but this is attributed to the global recession that was sparked off by a credit crunch in developed markets.
The performance of listed companies on the bourse depends on the trading that goes on. If less people are investing then the share price tends to go low. The current activity that shows a decline in the share price is an indicator that investment is low.
The source also revealed that NSSF was not investing the money into stocks or government bonds. NSSF has over about US$526.3m in workers savings but they are lying idle.
"If NSSF invested in bonds and stocks then it would also make the bourse active," the source says."The buyers or investors' perception in the market is negative and this explains why we are not getting them on board. There is scepticism in the people who are not willing to use their money in stocks," the source added.
"The bourse could however rebound if a new company came in with an Initial Public Offer (IPO). This offer would boost investor confidence. There was enthusiasm within potential investors when the National Insurance Cooperation (NIC) had announced that it would issue an IPO. However NIC did not issue the IPO and has been entangled in issues that have kept it off the bourse," he said.
The USE had hoped that the NIC IPO would help revive the markets but since it has been put on a halt then the bourse still remains inconsistent, as there are very few potential buyers attracted to the stocks.
"The people participating in the buying and selling of shares are those that have been involved already and there are no new buyers participating in the trading," the source said.
Be the first to Write a Comment!
Copyright © 2009 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
