Stockbrokers monitor trading activity at the Uganda Securities Exchange.
The performance of regional stock exchanges has been poor and they are
being urged to attract investors from Asia. PHOTO | FILE
By KABONA ESIARA
In Summary
East African markets need to attract big buyers as trading
has been hit by subdued demand and falling share prices. The region,
deal markers suggest, should offer more incentives such as lower
withholding tax on dividends for non-East African Community investors.
Currently, the markets are dominated by American, European and
regional investors, whose appetite for shares in regional stocks has
diminished as they opt for cheaper bargains in other markets.
“The region needs new investors, particularly from Asia. The
current crop of regional, American, and European investors has reached
the peak of its appetite levels, hence demand will definitely subside,”
said Davis K Gathaara, managing director at Baraka Capital.
Currently, all the four stockmarkets — Dar es Salaam Stock
Exchange, Rwanda Stock Exchange, Uganda Securities Exchange and Nairobi
Securities Exchange — have been hit by low trading volumes.
Rwanda Capital Markets Authority executive director Robert Mathu
said Asian economies have remained strong and their markets are
resilient, hence the region could tap into them to bolster activity on
the markets.
RSE market data for November 30 shows that the Bank of Kigali
counter had 4,296,400 shares on sale at between Rwf235 and Rwf258
($0.28- $0.31) but there were no bids. The few investors willing to buy
are bidding at reduced prices as witnessed on the Bralirwa counter,
where bidders were paying $0.16 per share instead of $0.17 on November
30.
“We are experiencing a bearish market and prices are coming down
gradually as sellers get desperate. Prices are fair at the moment but
we are advising a hold situation until the dust settles and a big buyer
comes in,” said Mr Gathaara.
Without many initial public offerings this season and the first
quarter 2017, the markets’ performance is expected to be dismal. In the
region, DSE appears the most attractive investment to investors with
five listings expected on the equity market and a commercial bank IPO on
the fixed income segment.
The DSE bond market is expected to remain active, according to
Ibrahim Mushindo, head of research and finance at the Dar es Salaam
Stock Exchange.
Tanzanian telcos have been compelled to list at least 25 per
cent of their shares to allow citizens to have a stake in these
companies. The telcos, according to market analysts, are still going
availing regulatory approvals to start trading on the secondary market
early next year.
Geoffrey Odundo, chief executive of the Nairobi Securities
Exchange suggests that momentum in regional markets can be further built
by having clear government debt programmes.
“Knowing how much to borrow and how to borrow it, within which
period, is crucial,” said Mr Odundo, adding that automating and
integrating the exchanges is crucial for attracting foreign investors.
“We see a lot of interest from foreigner investors in our markets,” he said.
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