The third quarter of 2024 is wrapping up and the Tanzanian stock market has shown a dynamic performance across various sectors, reflecting broader economic trends and investor sentiment. From January to September 2024, the Tanzanian stock market exhibited a notable increase in total market capitalisation, rising from 14.611tri/- in January to 17.769tri/- in September, a 22 per cent increase.
This surge reflects improved investor confidence and positive economic sentiment, driven by strong performances in key sectors and stable macroeconomic conditions. The Domestic Market Cap also grew by 7.0 per cent, reaching 12.184tri/- by September. Bond market activity was robust, with outstanding government bonds increasing by 18 per cent, from 20.236tri/- in January to 23.973tri/- by September.
This growth indicates increased government borrowing, aimed at financing infrastructure and development projects, while providing investors with a steady flow of fixed-income investment opportunities. Interestingly, the outstanding sustainable bonds remained unchanged at 459.04bn/-, showing no growth in this niche segment, which may present an area for further development in the near future.
Looking at key indices, the Dar es Salaam Stock Exchange Index (DSEI) surged by 22 per cent, reaching 2,129.03, reflecting the overall market expansion. The Tanzania Share Index (TSI) also grew by 7.0 per cent, mirroring the rise in domestic market activity. However, the Industrial and Allied Index (IA) slightly declined by 2.0 per cent, suggesting mixed performance in the industrial sector. On the other hand, the Banking and Investment Index (BI) saw a strong increase of 25 per cent, driven by impressive growth in the financial sector. The Commercial Services Index (CS) remained relatively flat, with no significant change recorded.
Several companies recorded significant price movements from January to September 2024, with notable gains in sectors such as banking, beverages and insurance.
CRDB Bank, for instance, saw its stock price rise by 39.13 per cent, from 460/- in January to 640/- in September, reflecting its strong financial performance and robust demand for its shares. Similarly, East African Breweries Limited (EABL), a cross-listed company had an impressive price increase of 82.97 per cent, rising from 1,820/- to 3,330/-. Jubilee Holdings Limited (JHL) similarly saw a 22.64 per cent price rise, from 2,960/- to 3,630/-,
reflecting positive investor sentiment toward insurance and financial services. KCB Bank, another cross-listed entity emerged as one of the top performers with a 108.57 per cent increase in its share price, soaring from 350/- in January to 730/- in September. This exceptional growth is attributed to the bank's strong regional presence and solid financial results, making it an attractive option for investors.
Domestic companies like NICO also posted substantial gains, with its share price increasing by 50 per cent to 750/- from 500/-, showcasing remarkable growth potential. However, not all companies fared well during this period. Some, like Swissport Tanzania (SWISS), saw their share price decline by 16.67 per cent, from 1,320/- to 1,100/-, potentially due to increased competition in the aviation sector.
Tanzania Portland Cement Company (TPCC) also faced a 11.93 per cent decline, driven by competitive pressures and higher operational costs in the construction sector. Moreover, other companies like Maendeleo Bank (MKCB), Tanzania Cigarette Company Limited (TCCL) and Tanga Cement (TTP) experienced moderate declines, reflecting the challenges in the industrial and manufacturing sectors. These declines may be indicative of shifting consumer demand, rising production costs, or increased market competition.
In terms of stock turnover, the first quarter of 2024 outperformed the subsequent quarters, with a total turnover of 54.36bn/-. This figure decreased to 38.85bn/- in Q2 and further to 30.07bn/- in Q3, representing a 44.7 per cent decline from Q1 to Q3. This downward trend in turnover suggests that trading activity slowed as the year progressed, possibly due to investor caution or a shift in market sentiment.
Similarly, stock volumes traded followed a declining trend throughout the year. Q1 saw 77.3 million shares traded, dropping to 69.77 million in Q2 and further down to 37.5 million shares in Q3.
This significant decline in trading volumes could reflect reduced liquidity or lower investor engagement in the later quarters of 2024. Investors may have been waiting for more favorable conditions or reacting to broader economic or geopolitical uncertainties affecting the market.
The banking and financial sector stood out as a key driver of market performance, as evidenced by the strong gains in the Banking and Investment Index (BI) and individual stocks like CRDB, KCB and NICO. This sector's resilience highlights its ability to weather economic uncertainties and benefit from growing demand for financial services. Investors looking for stable and growing returns might find opportunities in this sector, particularly as banks continue to expand their services and digital offerings.
In contrast, the industrial sector faced more mixed results, with companies like Tanga Cement and Tanzania Portland Cement showing declines. This sector may be experiencing pressures from rising production costs and competitive forces.
Also read: NICOL's 2023 financial story: Balancing stability, growth and diversification
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However, it remains a critical part of Tanzania's economic growth, particularly given the government's focus on infrastructure development. Investors may need to adopt a selective approach when investing in industrial stocks, focusing on companies with strong fundamentals and competitive advantages.
As we enter the fourth quarter of 2024, the Tanzanian stock market offers a mix of opportunities and risks for investors. While the banking sector has shown strong performance, the industrial and manufacturing sectors have faced challenges, reflecting broader economic dynamics.
The declining stock turnover and trading volumes suggest that investors may be adopting a more cautious approach, possibly waiting for clearer signals from both domestic and international economic developments. However, the overall growth in market capitalisation and the robust performance of key indices indicate that the market remains fundamentally strong.
For investors, the key to success in Q4 will be identifying sectors and companies with strong growth potential while staying attuned to macroeconomic trends. Tanzania's economic outlook remains positive, but market conditions could shift, making a well-diversified and strategic investment approach essential for navigating the final quarter of the year
