DSE activity seen picking up steadily

The demand for stocks at Dar es Salaam Stock Exchange (DSE) is expected to pick up due to lower returns in money markets.

 

The government papers, especially treasury bills (TBs) have of late been recording lower yields since the beginning of the year, reflecting comparative liquidity in the market. 

The bills opened the year at relatively good rates of 18.69 per cent but have declined to less than 13 per cent in the last auction, while bid amount remained higher.

Tanzania Securities’ weekly commentary issued over the weekend says that they anticipate strong support for various equities including DCB Bank, Twiga, Simba and Swissport. 

“We expect strong support from equities amid declining returns in other money markets,” the weekly commentary for the week ending last Friday shows. Zan Securities Chief Executive Officer Mr Raphael Masumbuko said declining yield rates reflect improvement of money supply in the market.

“Investors would opt for safer investments and may look for equity instruments,” Mr Masumbuko told the ‘Daily News’. 

He said going by statistics, currently, the highest dividends paid back at DSE was TCC stocks at 19.1 per cent when the dividends per share stood at 600/- while equity price was 3,140/-. 

The lowest was CRDB stock that registered a yield of 5.2 per cent at dividends of 9 per cent with a share price of 172/50.

“Returns per share might be higher if factored in price increase per share,” Zan Securities CEO said, adding: “it may also be lower compared to its price dropping.” 

Analysts on money markets say the T-bill rates dropped as bidders’ demand continued to increase the level of competition which in return pushed down yields. 

The National Microfinance Bank (NMB) said after the last week’s T-bill auction that the bidding was oversubscribed by 103bn/- against 110bn/- that the Bank of Tanzania (BoT) wanted to mop out of circulation.

“With the weighted average yield down at 12.68 per cent from 13.07 per cent, reversing the recent yield trend and reflecting a comparatively liquid market,” NMB said in a daily market report, e-market. 

Tanzania Securities CEO Moremi Marwa said portfolio investors normally turn to other investment opportunities when the T-bills rates are low. 

“When T-bills return becomes lower, investors are looking for other investment opportunities with better returns, given the level of risks,” Mr Marwa said.

“However,” Mr Marwa said, “the impact on equities might not be significant given the type of investors.” 

This is based on the fact that the key T-bills investors are commercial banks, controlling about 60 per cent of bills auction participation. 

The Tanzania Securities’ weekly commentary indicates “looking ahead, we expect increased activities on DCB (bank) counter after the rights issue closure. CRDB (bank) might remain attractive to foreign investors.”

The T-bills low rate is good for the economy, signifying the arrest of high inflation rates and easing of money supply in circulation. 

Barclays Bank Tanzania said “interest rates came off across all tenors with highest decline of 61 basis points (to 11.98 from 12.59 per cent) for 91-day bucket.”

While the T-bill rates are descending from 18.69 per cent of January to 12.68 per cent of last bid in October, the lending are heading north climbing from 14.84 per cent in January to 15.65 of July this year. 

The T-bills rate dropping, according to money marketers, pushes turnover and activity in the secondary bonds market. Five-year bonds worth 28.25bn/- changed hands last week compared to 10.5bn/- transacted the previous week.

Source: The Daily News,http://www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam

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