THE Tanzania Share
Index (TSI) remained bullish for a third consecutive week following a
0.54 per cent gain on the
domestic market capitalization.
The TSI at the end
of the week that ended on 31st January 2020 was 3,464.43 points while
the domestic capitalization stood at 9.098tri/-. The TSI gained 33.33
points since the beginning of the year to the end of January, while the
domestic capitalization grew by 0.97 per cent.
The rally on the
TSI and domestic market cap originates specifically from the rally on
the CRDB counter. The price of CRDB gained 18.18 per cent, moving from
110/- to 130/- during the week under review. The rally on CRDB was
fueled by the bank's annual results which reported 87 per cent growth in
profits.
The profit gain of
CRDB was a result of increased interest income by 9.4 per cent as
deposits and loan portfolio grew by 10.9 per cent and 8.4 per cent
respectively. Interest expenses fell as the bank increases focus on
retail customers who provide cheap deposits and take expensive loans
while historically having highest payback ratio.
CRDB moved 1.1mln
shares during the week, realizing a turnover 139.55m/-. CRDB accounted
for 4.9 per cent of the total turnover realized during the week. CRDB
closed the week with outstanding bids of more than 9mln shares while
there was zero offers.
Bids keep mounting
due to restrictive price determination rules by DSE which do not allow
price movement of more than 10 per cent in a single trading session.
The result is
investors are willing to pay than the highest accepted price of 140/-
and holders believe that they can sell at more than what is allowable in
the market while the market rules cannot accommodate both, hence a
price limbo.
In Kenya and
Uganda, price restrictions are removed during corporate events
announcements, especially releases of financial statements. May be it is
high time we adopt a similar approach. Apart from CRDB, NMB also had a
good year during 2019.
NMB grew profits by
52 per cent mainly as a result of a 28.5 per cent decline in impairment
expenses and increased non-interest income by 14 per cent. Interest
income slightly grew by 4 per cent while interest expenses went up 17
per cent.
Despite a
significant increase in profits, NMB counter remained quiet during the
week. The main reason for the rigidity on NMB counter is similarly the
trading rules. The total turnover realized during the week was 2.86bn/-,
down 84 per cent compared to the previous week. The total volume during
the week was 1.6mln shares.
TBL remained the
top mover, accounting for 88.7 per cent of the total realized equity
turnover during the week. TBL moved 317,350 shares most through off
market block transactions at a price of 8,000/- despite TBL long
standing market closing price of 10,900/-.
The All Share Index
(DSEI) gained 21.76 points to 2,112.77 points following a 1.04 per cent
increase in the total market capitalization. The growth on the total
capitalization results from an increase in cross listed prices led by
NMG which grew by 3.8 per cent. Foreign investors dominated the market
while remaining net sellers.
Foreign investment
accounted for 82 per cent while foreign divestment accounted for 88.5%
of the total divestments. Local investors accounted for the balance.
Money Market, Bills and Bonds Interbank Money Market (IMM) transactions
lowered by 55 per cent during the week as the month comes to an end.
The total value of
transactions totaled to 51bn/-from previous week's 113bn/-. The total
value of transactions during January 2020 slightly went down by 12.14
per cent to a total of 423.4bn/- from December's total of 481.9bn/-. The
weighted average interbank rate gained 15bps to 4.15 per cent.
The same is a gain
of 41bps from the end of December. The Bank of Tanzania offered 109bn/-
worth of 15 years Treasury bond during an auction held on 29th January
2020. The bank received 140 bids worth 189.59bn/-at a lowest and highest
bid prices of 84.9277/- and 92.2479/- respectively.
The Bank of Tanzania accepted only 47 bids worth exactly the offer amount of 109bn/-at a minimum successful price of 89.75/-.
Similar to the
trend in other Treasury securities, the weighted average yield to
maturity (WAYTM) dropped by 5bps to 15.19 per cent compared to 15.24 per
cent realized during the previous 15 years Treasury bond auction held
on the 4th of December 2019.
The bond under
review shall mature on 30th January 2035. Currency Market Activities on
the Interbank Foreign Exchange Market (IFEM) almost halved during the
week, after dropping by 47 per cent. The total value of transactions was
8.8 million US dollars compared to 16.6 million US dollars traded
during the previous week.
The week was
characterized by sort of a liquidity crunch as the value of transactions
dropped while the week on week exchange rate variation was the highest
on the downside since early 2019. The weighted average exchange rate
rose by 94 pips to TZS 2,300.83 compared to TZS 2,299.89/USD.
On a month to month
basis, the shilling depreciated by 86 pips since the end of December
whiles the total value of transactions dropped by 61 per cent. The total
value traded during January was 69.45 million US dollars compared to
177.65 million US dollars traded in December. The exchange rate at the
end of December was TZS 2,299.97/USD.
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