- Published on Wednesday, 20 June 2012 02:34
- Written by ORTON KIISHWEKO
- Hits: 874
FOREIGN ownership threshold in listed companies at the Dar es Salaam Stock Exchange (DSE) should be uplifted to make more the bourse more vibrant, the DSE Chief Executive Officer, Mr Gabriel Kitua, said.
"Market players would want the threshold to be relaxed because there is big interest of foreign investors in our market," he said in an interview with 'Daily News' on Tuesday. He said the 60 per cent ceiling limits DSE from functioning at its full potential, saying domestic equities trade below the actual value.
He said the Central Bank has the prerogative to control Capital account on behalf of the government and that the Capital Market Authority has advised the government to lift foreign ownership. He said that if foreign portfolio investors come and buy shares, they would be buying shares from Tanzanians and thus increasing money to invest in various projects.
"The direct investment can increase if they see stock markets growing so that even if they want to come out or release some of their funds, they can do that on a transparent market, which is the DSE," he said. He said that if more foreign investors bring their money to DSE, it will increase trading and subsequently increase sellers and buyers as well as better prices.
"Currently, the restriction makes most of the local stocks be below the actual values in comparison to other stocks in the region or other international stocks," he said. An Investment and Research Officer at Orbit Securities, Mr Godfrey Gabriel, said it was unfortunate foreign ownership in companies like Tanzania Breweries Limited (TBL) is already exhausted and therefore, foreign participation is restricted despite higher demand.
"The situation is triggering market players to start thinking of uplifting foreign ownership threshold in listed companies from 60 per cent to 70 per cent or 75 per cent of which will make our market growth vibrant," he said. CMSA Principal Public Relations Officer Charles Shirima told 'Daily News' that the move would call for amendment of the Capital Market and Securities Act, specifically the foreign investors regulations.
"For such changes, there has to be amendment in regulations and that means we have to submit a proposal to that effect to the ministry of finance," he said. The Bank of Tanzania (BOT) regulations allow foreign investors to hold up to 60 per cent of the ownership of a listed company.