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| DSE brokers |
Limitation of the foreign ownership in the Dar es Salam Stock Exchange
(DSE) listed companies to 60 per cent is crippling trading on the bourse,
experts have warned.
The market analysts have it that the 60 per cent ceiling limits the bourse
from functioning at its full potential, saying domestic equities trade below
the actual value.
They say maintaining the restriction makes most of the local stocks to
be quoted below the actual values in comparison to other stocks in the region
or in the international bourses.
A DSE stockbroker told the ‘Daily News’ yesterday that the restriction
is mostly felt by local investors who participated in the 120bn/- min-primary
offer of TBL who wanted to capitalise on the secondary market.
“We anticipated that since the regulator gave a waiver to allow foreigners
to participate in min-TBL offer, the same will be extended to secondary
market,” the broker said, “but that was not the case.”
He said the law and regulation are now biased against foreigners who
are allowed to sell to local, East Africans and foreigners, but barred from buying from locals who want to
sell shares.
Sources within the industry said the situation is critical to the extent
that a local small bank that lend about 5bn/- to investors to participate in
the TBL offer is facing hardship as borrowers failed to sell the share at
anticipated gain.
“The DSE broker and the bank said they will write to the governor showing
their dissatisfaction and seeking a waiver after a number of letter writing,
meetings and consultation to CMSA hit a wall,” the source within money market said.
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| Mr Kitua |
Stockbrokers said foreigners were willing to buy TBL shares at over
3,000/- per share compared to the market rate of 2,780/-, which remains
relatively low as compared to other similar stocks.
The DSE Chief Executive Officer, Mr Gabriel Kitua, told the ‘Daily
News’ over the phone yesterday that he personally wanted the bourse to trade
vibrantly but it’s a challenge when suffocated with regulation and laws that
work against the market.
“It might be a bad law but we are powerless until it’s amended first...at
least CMSA should give a waiver power to speed up things or extending the cap
rate from 60 per cent to say 75 per cent or zero,”
Mr Kitua said. The CMSA Principal Communication Officer Charles Shirima
said they are aware of the new challenge facing the bourse at the moment, but
the 60 per cent limit is there according to the laws and regulations.
“We are powerless when it comes to give waiver, as we have to ask the
concern authorities as well and its time consuming,” Mr Shirima said.
Source: The Daily News, reported by Abduel Elinaza
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