Tanzania: Dse Indices Go Different Directions

THE week that ended on 16th April 2021 was an eventful week which saw the major indices go in different directions.

The Tanzania Share Index (TSI) dropped by 14.61 points after a movement on five counters with the bear having an upper hand. The prices of DSE and NICOL went up by 3.77 per cent and 2.63 per cent to close the week at 1,100/- and 195/- respectively.

The price of NICOL is probably reacting to prospects of a handsome dividend from NMB despite the cloud of uncertainty surrounding banks' eligibility to issue dividends. Falling counters were led by CRDB which dropped by 6.52 per cent and closing the week at 215/- from 230/- during the end of the previous week.

The decline comes after CRDB missed the scheduled dividend announcement which was to be latest at 13th April 2021, according to the bank's own calendar for FY2021.

It is uncertain the bank shall issue dividends within the normal timeframe considering the circular issued earlier during the year, by the Bank of Tanzania, for banks to maintain NPL less than 5 per cent and cost to income ratio less than 55 per cent to be able to issue dividends and bonuses.

Until the latest financial results for December 2020, CRDB had a cost to income ratio of 61 per cent and NPL of 4.2 per cent. The bear visited the JATU counter, dragging it down by 5.95 per cent to close the week at 1,580/- while Tanga Cement (TCCL) closed down by 1.23 per cent.

TCCL trading down is a good sign showing increased interest in the company following the firm's loss reduction by more than 80 per cent. Following the prices' movement, the domestic market capitalization dropped by 0.42 per cent to a total of TZS 9,210.37bln ($3.99bln) while the TSI closed the week at 3,503.06 points.

The All Share Index (DSEI) gained 26.65 points to close the week at 1,895.48 points following a 1.43 per cent climb of the total market capitalization. On top of domestic gainers, the cross listed giants were the biggest positive influence on DSEI after KCB went up 4.65 per cent, followed by East African Breweries which went up by 4.57 per cent.

Jubilee Holdings (JHL) also gained 3.36 per cent further feeding the bull on the total capitalization. The total market cap closed the week at TZS 15,747.84bln ($6.8bln). The total equity turnover went up by 13.5 per cent after major transactions were seen on the VODA and CRDB counters.

The total equity turnover during the week amounted to TZS 2.34bln ($1.01mln) while the volume of shares traded climbed from 530,743 to 6.89mln thanks to CRDB. The volume of shares was traded in 172 deals compared to 132 during the previous week.

In a rare scenario, Vodacom was the top mover during the week, after accounting for 74.5 per cent of the total equity turnover during the week. Vodacom traded 4.36mln shares at a price of 400/- in two prearranged block transactions. The transaction price is 48 per cent lower than the official market closing price which is 770/-.

Vodacom was followed by CRDB which accounted for 22.2 per cent while DSE accounted for 2.6 per cent. Despite very trivial activities on the TBL counter, foreign investors dominated the market while remaining net sellers, thanks to the prearranged activities on the Vodacom counter.

Foreign investors accounted for 76.53 per cent of the total weekly investment and 80.19 per cent of the total divestments while the net foreign outflow amounted to $0.037mln. Local investors accounted for the balance on both sides.

Market, Bills and Bond

The Interbank Cash Market (IBCM) has had fewer sessions than normal during the recent weeks while the value of transactions has fell as well. The total amount traded during the week under review was TZS 6.5bln ($2.8mln), which is 7 per cent lower than the previous week.

The interbank rate went up 14bps to 3.78 per cent by the end of the week, stressing a seemingly tight liquidity. Appetite for the 35days tenor rose during the Treasury bills auction held on 14th April 2021, leading to a 100 per cent oversubscription and 7bps decline of the tenor's yield to 2.93 per cent.

The 182days and 364days tenors both saw a rising yield by 18bps and 3bps respectively. The yields for the two tenors stood at 3.9 per cent and 6.01 per cent. At 3.3 per cent, the 182days tenor remained constant on the yield and subscription compared to the previous auction.

The Bank of Tanzania offered a total amount of TZS 76.7bln ($33.2mln) while the public tender size amounted to TZS 168.67bln ($73.02mln) in 46 bids, marking an oversubscription rate of 119 per cent. The Bank of Tanzania accepted a total 38 bids worth TZS 162.92bln ($70.53mln), somewhat 96.6 per cent of the total offer size.

Currency Market

Value of transactions on the Interbank Foreign Exchange Market (IFEM) went up by 82 per cent to $5.46mln compared to previous week's $3mln. Rise in value went along with a slight appreciation of the shilling by 5 pips to indicate improved foreign exchange liquidity during the week. The shilling closed the week at a weighted average exchange rate of TZS 2,309.92/USD.

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