21 February 2017

Tanzania: Dar Bourse Turnover Down 44%

Photo: Daily News
The DSE Chief Executive Officer, Moremi Marwa.

Dar es Salaam — Turnover at the Dar es Salaam Stock Exchange (DSE) dropped by 44 per cent last week as investors apply the wait-and-see approach in the wake of ongoing initial public offerings (IPOs) and the subsequent listing of telecom companies as well as the release of listed companies' financials.

The week-on-week turnover decreased to Sh228 million compared with Sh406.46 million recorded previously, according to reports from brokerage companies.

This is the second consecutive fall of the DSE business. During the previous week, it had dropped from Sh2.54 billion.

"When there is an initial public offering (IPO), the business is normally slow as investors put their energy in the next thing," said Mr Raphael Masumbuko, chief executive officer of Zan Securities by phone.

"Right now, some buyers are preparing for the IPOs of the telecommunications companies and others are waiting for the release of the annual financial statements of their firms," he added.

Currently, the IPO for Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) Investment Company (TICL) is in progress as the firm seeks to raise Sh45 billion to finance its business diversification programme by injecting the proceeds into other income-generating activities.

The process officially started on Wednesday next week (February 1, 2017) through late March in which a total of 112,500,000 ordinary shares are up for grabs at a price of Sh400 each. Besides, three mobile operators - Vodacom, Tigo and Airtel - have submitted their respective skeleton prospectus to the DSE and Capital Markets and Securities Authority (CMSA) applying for IPOs and subsequently listing on the bourse. Since the submission, Vodacom has made some strides while prospectuses for Tigo and Airtel remain at skeleton stage as the companies grapple with boardroom decisions on how to move ahead.

According to the Electronic and Postal Communications Act, (Cap. 306), which was amended in June last year, mobile phone firms are compelled to offload 25 per cent of their shares to Tanzanians via the DSE as the country seeks to reap maximum benefits from the firms' proceeds.

Top trading equities that dominated the market share in this week were Tanzania Breweries Ltd (TBL) at 33 per cent, followed by Mwalimu Commercial Bank (MCB) at 20 per cent, the self-listed DSE at 18 per cent, Mkombozi Commercial Bank (MKCB) at 9 per cent, CRDB Bank PLC at 7 per cent and Tanzania Cigarette Company (TCC) at 5 per cent.

None of the domestic equities appreciated during the week although DSE lost in value by 5.66 per cent, closing the week at Sh1,000 per share.

"The recent DSE volatility has created a fertile ground for traders. Prices should stabilize within the next two or three weeks to the downside," stated Zan Securities in its weekly wrap-ups.

"We expect to see improvements in the coming weeks particularly in the Industrial and Allied segment with support from both local and foreign investors," stated Tanzania Securities Ltd in its weekly commentary.

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