DAR ES SALAAM: SOME stock brokers have said strong listed companies' earnings potential is expected to drive positive performance of the Dar es Salaam Stock Exchange in 2024.
The corporate earnings are tipped to be pushed by robust economic growth forecasts where the IMF projected real GDP of 5.2 per cent and consumer prices at 4.0 per cent this year.
Zan Securities Advisory and Research Manager Isaac Lubeja told the 'Daily News' that the banking and finance sectors are expected to be favourites in 2024, given that the Banks, Finance & Investment index (BI) surged by 34 per cent last year.
"Several leading companies have already reported significant cumulative growth in profits for the last year's third quarter," Mr Lubeja told the 'Daily News' on Wednesday, suggesting that:
"Full-year results are likely to be similarly impressive and lead to upward revisions in stock target prices."
Additionally, the DSE might experience ongoing growth in other sectors than banking, finance and investment, such as manufacturing, especially cement stocks and telecommunications.
"Assuming everything goes as planned, I foresee a robust year for stock investors," Mr Ammi Julian, Orbit Securities Investment Analyst, said.
He pegged his forecast on the fact that leading entities like NMB Bank, CRDB Bank, Swissport and Twiga Cement are approaching the end of their financial year and investors anticipate a rise in dividends. Similar expectations extend to companies like NICOL and TICL.
"Vodacom emerges as a dark horse," Mr Julian said after the telecom pre-tax profit surged from 7.7bn/- from September 2022 to 34.1bn/- last September:
"With a strong finish anticipated for its financial year, investors might also anticipate dividend payouts."
However, Alpha Capital Head of Research and Analytics, Imani Muhingo, said the market might experience a relaxed growth in the banking sector since the central bank pledged to continue with a less accommodative stance.
"We expect to see a relaxed growth in the banking sector from a sharp growth in the last five years, especially as the central bank maintains a less accommodative policy," Mr Muhingo said.
He also forecasted a rise in foreign investors' participation this year backed by US Fed rate cuts and other expansionary policies by developed economies.
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"If the US goes on with rate cuts, we should expect some net foreign inflows, from net outflows in 2023. Net foreign inflows should support equity prices, raising a positive outlook for the year," Mr Muhingo said.
Exodus Advisory CEO Ramadhan Kagwandi said the departure of foreign investors last year due to global economic tensions could be reversed if economic conditions continue to improve.
Additionally, he said the country maintained a B+ rating by Fitch, signifying a favourable level of creditworthiness.
"This rating is expected to enhance investor confidence, bolstered by a positive outlook towards Foreign Direct Investments (FDIs), which may accompany foreign portfolio investment," Mr Kagwandi said.
In the fixed-income sector, relatively tight liquidity conditions are expected to continue pushing yields higher, taking the example of the recently issued 25-year bond that recorded a cut-off yield of 15.4 per cent.
"We anticipate that long-term yields will remain around the 15 per cent mark in the first quarter of 2024, with the 1-year Treasury bill possibly reaching approximately 12 per cent," Mr Lubeja said.
He was seconded by Mr Julian who said yields have been rapidly increasing since the latter half of last year.
"This trend may persist due to the government's financial commitments, such as completing strategic projects, possibly resulting in a heightened interest in raising funds domestically," Mr Julian said.
The stock and debt brokers suggested that in 2024, key sectors to watch include banking stocks, cement stocks, closed-end funds and the self-listed DSE.
