THE domestic market which has 21 listed equities tracked by the Tanzania Share Index (TSI), remained stagnant for a third consecutive week despite a substantially proportional increase in market activities but insignificant in real terms.
We say insignificant since the turnover is still lower than the weekly average for this year.
The TSI is still at 3,291.83 points while the domestic market capitalisation remained at 9.065tri/-($3.94 billion).
For the past three weeks prices on the Dar es Salaam Stock Exchange (DSE), have remained stagnant which means during the period there is no investor who has registered neither capital gains nor losses.
This should have a negative effect on the market’s attractiveness depicting crippling illiquidity.
Although high volatility is risky and discouraged, some constant volatility is encouraged and essential for investors to take in profits from exchanges.
The All Share Index (DSEI), on the other hand went down for a second week in a row, this week losing 15.2 points to close the week at 1,909.36 points. Synonymous to DSEI, the total market capitalization fell by 0.79 per cent.
The fall in the total market cap was a result of a deceleration of two heavyweights, Acacia Plc (DSE: ACA) and KCB Bank (DSE: KCB), by 5 per cent and 3.4 per cent respectively. The deceleration on these two huge counters was enough to neutralize an acceleration of 2.3 per cent on another heavyweight namely East African Breweries Ltd while National Media Group gained 2.3 per cent as well.
The rest cross listed counters remained stagnant for the week.
The total equity turnover improved compared to the preceding week, recording a weekly total of 184.4m/-(0.08 million US dollars) realized in 128 deals while trading a total of 1.47m/-shares.
The reported turnover is a major improvement from last week’s 81.66m/-(0.036 million US dollars).
Although the turnover has improved week on week, it is still considerably down compared to the weekly average of 2.3bn/-(1.0 million US dollars) since the beginning of the year.
Local investors were net buyers during the week although market activities were almost evenly distributed.
Local investors accounted for 60 per cent of investment into the market while accounting for 46 per cent of divestment from the market while foreign investors accounted for the balance on both sides.
Money Market, Bills and Bonds The Interbank Money Market (IMM), recorded a far busier week compared to the preceding week, reporting a growth in transactions value by more than two folds.
The total amount traded on the IMM stood at 121.5bn/- (52.81million US dollars) compared to 52.65bn/-(22.89 million US dollars), traded during the previous week.
The traded amount during the week is the highest in last four weeks which had saw declining amounts and interbank rates.
The weighted average interbank rate during the week lost 6bps compared to the previous week showing a sustained strength in liquidity in the banking sector.
The weighted average interbank rate at the end of the week was 5.04 percent. The Bank of Tanzania on behalf of the government issued a 15 years Treasury bond worth 109bn/-(47.38 million US dollars), in a Treasury auction held on the 11th September 2019.
The Bank received 66 bids worth 116.6 bn/-(50.69 million US dollars) from the public marking an oversubscription rate of 7 per cent.
The Bank accepted 94.74bn/-(41.18 million US dollars) from 40 bids.
The amount accepted is 87 per cent and 81 per cent of the offer size and tender size respectively.
The weighted average yield to maturity (WAYTM), reported at 15.37 per cent during the auction under review, is a downplay of 30bps compared to the previous 15 years Treasury auction held on the 17th July 2019 which reported a WAYTM of 15.67 per cent.
Currency Market The Interbank Foreign Exchange Market (IFEM), has caught momentum after starting September on a slower pace, reporting the busiest week of the year which saw transactions worth 54.48 million US dollars go through the market, an increase of 35 per cent from previous week’s 40.32 million US dollars.
This is a good indicator that foreign exchange liquidity has substantially improved in the banking sector, considering the recent trend of the central bank being a substantial net buyer of forex from the IFEM.
Despite liquidity improvement the shilling depreciated by 24 pips to report a weighted average exchange rate of TZS 2,300.74/USD compared to TZS 2,300.50/USD reported during the previous week but still lower than TZS 2,300.75/ USD reported during the week before last