DSE sees 10pc rise in turnover, reaching 4.98bn/-

DURING the past week, the Dar es Salaam Stock Exchange (DSE) witnessed a modest but notable 9.6 per cent surge in turnover, increasing from 4.54bn/- to 4.98bn/-.

This uptick indicates a shift towards high-value transactions, despite a significant 35 per cent drop in the number of shares traded.

This trend hints at a market that is seeing more concentrated trading, focusing on larger and more valuable deals, rather than a broader distribution of trades. In terms of market value, the DSE’s total market capitalisation edged up from 17.89tri/- to 18.11tri/-, marking a rise from 6.58 billion US dollars to 6.66 billion US dollars.

However, not all was rosy. The domestic market capitalisation dipped slightly by 0.13 per cent, signalling constrained movements in the performance of locally listed stocks. The DSE’s indices painted a nuanced picture.

The All-Share Index (DSEI) recorded a gain of 26.68 points, signalling an overall positive trend in the market, driven primarily by cross-listed and foreign-owned stocks. On the other hand, the Tanzania Share Index (TSI), which tracks locally listed stocks, experienced a minor decline of 6.02 points.

This divergence suggests that while foreign interest in the market remained strong, domestic counters faced some resistance. Several companies emerged as significant players during this period.

NICOL gained 6.67 per cent, suggesting renewed investor confidence in the company’s prospects.

DCB Commercial Bank followed with a 3.23 per cent increase, while DSE Plc also posted a modest gain of 0.83 per cent. Conversely, Tanga Cement, Afriprise and Twiga Cement faced declines, with losses of -1.02 per cent, -2 per cent and -2.7 per cent respectively.

In trading activity, CRDB Bank and Tanzania Breweries Limited (TBL) took centre stage. CRDB traded over a million shares, securing a turnover of 686.63m/-.

TBL, on the other hand, dominated the market with a turnover of 3.42bn/- from approximately 600,490 shares, cementing its position as a heavyweight in the DSE. Beyond the DSE, the East African Community (EAC) showcased promising economic resilience, driven by robust growth in key member states such as Rwanda, Uganda and Tanzania.

Despite global uncertainties, these nations exhibited impressive economic expansion in the second quarter of 2024, offering strategic opportunities for investors looking to tap into one of Africa’s most dynamic regional blocs. Among the standout performers, Rwanda led with a remarkable 9.8 per cent economic growth, a leap from the 6.3 per cent growth recorded in the same quarter of 2023.

Uganda followed closely with a growth rate of 6.6 per cent, up from 5.6 per cent in the previous year. Meanwhile, Tanzania continued to assert its role as an economic powerhouse in the region, posting a 5.3 per cent growth rate, an increase from the 4.7 per cent seen in the second quarter of 2023.

The country’s Second Quarter Gross Domestic Product (QGDP) at current prices reached 52.0tri/-, compared to 47.4tri/- last year.

Even when adjusted for inflation (at constant 2015 prices), the GDP reached 38.4tri/-, underscoring the country’s economic stability amid global challenges.

From an investor’s viewpoint, Tanzania’s economic dynamics present compelling prospects. Sectors experiencing the highest growth include financial and insurance activities, which surged by 16.1 per cent, information and communication, which grew by 11.3 per cent and electricity, which expanded by 11.0 per cent.

These sectors underscore the country’s ongoing transition towards a diversified economy.

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A closer examination of Tanzania’s GDP composition reveals that tertiary activities accounted for 40.5 per cent of the total GDP, driven by rising domestic consumption and a growing middle class.

This sector, which encompasses services like trade, finance and transport, is steadily becoming the backbone of Tanzania’s economic growth. However, primary activities, including agriculture and mining, still play a crucial role, contributing 38.6 per cent to the GDP.

Secondary activities, which include manufacturing and construction, contributed 20.8 per cent of the GDP, showcasing steady growth and highlighting the government’s efforts to boost industrial output. Sectoral shifts and GDP contributions are redefining the economic landscape of Tanzania and the broader East African region. Agriculture remains a cornerstone of Tanzania’s economy, contributing 19.8 per cent to the GDP.

However, the rising contribution of the financial sector at 11.4 per cent signals a maturing market with increasing opportunities in banking, insurance and financial services.

The transport and storage sector’s contribution of 8.6 per cent highlights the country’s expanding infrastructure, critical for facilitating trade and regional integration. The economic growth information highlighted here is crucial for investors in the DSE for several reasons.

Firstly, strong economic growth in Tanzania and the East African Community (EAC) signals a favourable environment for businesses to expand, generate profits and enhance shareholder value.

When key sectors such as financial services, communications and infrastructure exhibit robust growth, it indicates the increasing resilience and diversification of the economy, which in turn contributes to the stability of listed companies and their earnings potential.

Moreover, the rise in sectoral contributions like financial services and infrastructure reflects structural changes that can open up new avenues for investment.

For instance, growth in financial activities could translate to greater profitability for banks and financial institutions listed on the DSE. Similarly, improvements in infrastructure foster a more supportive environment for trade and logistics, benefiting companies in transport and manufacturing sectors.