23 January 2018

Tanzania: CRDB, DSE Shares Gain As Market Ends in Bull Run

Stock Market

CRDB and DSE Plc were the only gainers during the week ending 19thJan 2018 while Swissport lost ground over the reporting period. DSE Plc posted a 11.7 per cent gain to close the week at 1,340 from1,200 at the end of previous week, with shares 59,281 changing hands between local investors.

CRDB counter moved 1,737,221 shares during the week, with bigger volume changing hands at the beginning of the week, where foreign investors commanded roughly 60 per cent on the buying side. The whole lot was sold by locals.

Increased interest in CRDB shares pushed the price higher by 9.4 per cent to 175 from 160 posted a week earlier. Swissport was the week's laggard, losing 9.1 per cent of its value when the price fell from 3,760 to close the week at 3,500.

A total of 51,345 shares were transacted. Other counters were inactive during the week, except for TBL which traded 86,993 shares at prices between 13,500 and 14,000. The volume was however insufficient to move the price which remained at 14,000.

Turnover during the week increased almost five-fold to Tshs 1.81bn ($0.80mn) from 371m/- (0.17 million US dollars) recorded the preceding week. Domestic listed stocks Index (TSI) gained 0.3 per cent (12.25 points) to close the week higher at 3,935.80 versus 3,923.55 a week earlier.

Likewise, investor wealth increased by 0.3 per cent, adding 32.12bn/- (14.29million US dollars) to domestic listed market capitalization reaching 10,318.63bn/- (4.59 billion US dollars) from previous week's figure of 10,286.51bn/- (4.58 billion US dollars).

Overall All share Index also posted a 17.03 points gain ,lifting the index to 2,377.15 from 2,360.12. The week's gainers outstripped laggards value-wise to move the Bourse into positive territory. Out of six cross-listed counters, three appreciated while the other three lost value.

ACACIA, JHL and NMG posted a translated price gain of 6.7 per cent, 4.0 per cent and 7.8 per cent respectively while EABL lost marginally by 0.6 per cent with Kenya Airways and Uchumi Supermarket Limited losing 2.8 per cent and 10.0 per cent of their values respectively.

Going forward we expect to have the same roller-coaster moves on some counters as what happened to Swissport. On DSE Plc and CRDB counters however,we might continue to experience price upward pressure because volume on the bid-side has been outstripping offers the past few days.

Both counters financial year end on 31st December, therefore February and March are the critical months to appraise their performance and decipher possible price direction. Money Market, Bills and Bonds Interbank cash market data up to 18th Jan 2018 (as per BoT website) shows cash overnight rate decreasing by 22 basis points to 2.74 per cent from previous week's 2.96 per cent.

Volume transacted was down 36.6 per cent to 78.00bn/- (34.70 million US dollars) from 123.00bn/- (54.81 million US dollars) recorded the preceding week. During the week, Bank of Tanzania conducted a Treasury bonds auction on 17th Jan 2018.

A 9.18 per cent 5-year T-bond matures on 17th Jan 2023.The auction tender size was 90bn/- (40.04 million US dollars), the same as the amount offered during the preceding 5-year T-bond auction held on 8th Nov 2017. Investors submitted 123 bids worth 283.38bn/- (125.61 million US dollars) at prices ranging between 70 and 93.14 per 100.

The minimum successful price was 88.03 which cleared the amount offered hence only 23 bids worth the tender size was accepted. Amount accepted was the same for the preceding 5-year T-bonds where 22 bids were successful out of the total submitted 125 bids worth 233.95bn/-(104.25 million US dollars).

The auction under review's demand strength as measured by bid-cover-ratio was higher at 3.1-times versus the preceding auction's ratio of 2.6-times. Consequently, this pushed yield-to-maturity down 148 basis points to 12.16 per cent from 13.64 per cent. The Government treasury bonds pay interest twice a year for the duration of the investment, with investors enjoying a tax-free return, except for coupon on a 2-year paper.

Provided that all treasury bonds are subsequently listed on DSE, investors need not hold them to maturity. For the week ending 19th Jan 2018 bonds worth 594.30m/- (0.26 million US dollars) where transacted on the secondary market at prices ranging between 87.87 and 95.34 per 100 for 15-year 13.50 per cent T-bonds. These bonds matures between 2028 and 2032.

Only one 10-year 11.44 per cent T-bond was transacted at 83.58 maturing in 2028. Volume traded the week earlier was much higher at 52.35bn/- (23.33 million US dollars) worth of T-bonds at prices ranging between 75.93 and 100.50.

Currency Market

The shilling lost 0.16 per cent of its value against the US dollar by closing the week at TZS2,247.78/USD compared to the preceding week's 2,244.26. A total of US$35.18mn was transacted, up 62.1 per cent compared to the week before where US$21.70mn transacted, according to the data available on the BoT Website for the week to 18th Jan 2018.

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