DSE sees 65pc decrease in market turnover

DURING the trading week ending on January 04th, the Dar es Salaam Stock Exchange (DSE) saw a decrease in turnover compared to the prior week.

The total market turnover decreased to 3.552bn/-, reflecting a 64.61 per cent downtick from the previous week’s 10.038bn/-.

The pre-arranged board registered some activities as DSE recorded a block trade. Throughout the week, DSE dominated trading activities, representing 55.58 per cent of the total market turnover, followed by CRDB at 37.85 per cent and TPCC— Twiga Cement at 2.83 per cent.

TPCC was the top gainer for the week appreciating by 18.42 per cent reaching 3,600/- per share. CRDB gained 1.52 per cent to close off the week at 670/- per share.

DSE was the sole loser for the week depreciating by 1.67 per cent to reach 2,360/- per share. In terms of market capitalisation, there was a general increase in the size of the markets, with total market capitalisation increasing by 2.09 per cent to 17.951tri/- by the week’s end.

Similarly, domestic market capitalisation increased by 1.11 per cent, reaching 12.244tri/-.

Key benchmark indices

All Share Index (DSEI) closed at 2,149.67 points increasing by 2.05 per cent.

Tanzania Share Index (TSI) closed at 4,619.29 points increasing by 1.04 per cent.

Sector Indices 

• Industrial & Allied Index (IA) closed at 5,044.80 points, up by 1.79 per cent
• Bank, Finance & Investment Index closed at 5,785.55 points, up by 0.539 per cent
• Commercial Services Index closed at 2,138.48 points, unchanged from the previous week.

Market News Round up IMF warns of FX pressure in 2025

The IMF has recommended that exchange rate flexibility be the primary tool to manage potential foreign exchange (FX) market pressures in 2025.

Despite the recent easing of pressures, risks re-main, especially with the low season for tourism approaching.

Key measures, according to the IMF, include the issuance of a foreign exchange policy and the revised Interbank Foreign Exchange Market (IFEM) code of conduct.

These, along with the Bank of Tanzania’s (BoT) commitment to competitive FX auctions, have been crucial in supporting liquidity and price discovery.

The IMF, however, suggested that the recent appreciation of the shilling may weaken in the first half of 2025 and that a comprehensive set of measures will be needed to stabilise the pace of local currency gains.

IMF is highlighting potential vulnerabilities from external shocks, shifts in global market conditions, or domestic economic factors.

ALSO READ: DSE December trading hits record volume

Highlights: Debt Market

Primary market

Within the week the treasury bill auction scheduled for 31 December 2024 was cancelled.

However, The Bank of Tanzania, through a public notice released on 31 December 2024, has announced a change in the approach to determining coupon rates for Treasury bonds, effective January 2025.

Under the new framework, coupon rates for Treasury bonds will largely be determined by prevailing market conditions for instance interest rates and secondary market yields of equivalent tenors.

This shift marks a significant change from the previous practice, where coupon rates remained fixed over multiple auctions, often leading to misalignment with the market environment.

The issuance calendar for auctions will not include details of the coupon rate, however the coupon rate for each auction will be announced in the respective call for tender, published usually on the Friday before the auction date.

Secondary market

During the week ending on January 03rd, market activities saw a decrease compared to the previous week. Overall turnover decreased by 3.88 per cent, from 33.2864bn/- to 31.9963bn/-.

However, there was a marginal increase in the number of trades, rising from 84 to 102. Trading activities primarily focused on the long- end of the yield curve, with the 15-year, 20-year and 25-year bonds traded contributing to 99.76 per cent of the total turnover. In the corporate bond segment, there was an increase in activity compared to the previous week.

NMB corporate bond NMB-2023/26.T1 recorded four trades totalling 43.5m/- at an average price of 90/0125. NBC corporate bond NBC-2022/27.T1 recorded one trade with a face value of 13m/- at a price of 89/1441.

Outlook:

Equities

The equity market witnessed strong trading activity in December, with a total trading volume of 45.4bn/-, the highest monthly volume of the year.

However, the domestic market value declined by 0.79 per cent during the same period. This decline, despite the robust trading volume, is primarily attributed to year-end sell-offs as investors sought to free up liquidity for seasonal expenses.

Nevertheless, this situation presents a unique opportunity for investors to acquire high-quality stocks at attractive valuations.

Fixed Income

The market is still digesting the new issuance calendar for H2 2024/25, which introduces market-determined coupons. In the money market, the central bank continues to resist allowing the weighted average yield (WAY) of the one-year Treasury bill to surpass 13 per cent, with the most recent auction recording a WAY of 12.99 per cent.

Notably, for the first time since March, the central bank has permitted long-dated Treasury bonds (20- and 25- year) to be issued at discounts.

This was observed in the auctions held on November 27 and December 18, where minimum successful prices for the 20-year bonds were recorded at 99.5 and 98.3096, respectively.

This shift has led to increased investor participation despite the typical seasonal dip in investment inflows.