Foreign participation on equity to rebound

DAR ES SALAAM: THE Dar es Salaam Stock Exchange (DSE) anticipates a resurgence in foreign investors activity as the US Federal Reserve prepares to initiate a series of rate cuts.

Alpha Capital, Head, Research and Financial Analytics, Imani Muhingo, said yesterday that currently the foreign participation is still limited, similar to the last two years, when the US adopted a tighter monetary stance.

“Foreign participation on the DSE was relatively higher during the week under review while net foreign outflow dropped by 83 per cent,” he said.

The foreign investors accounted for 13.3 per cent of total equity purchases during the week and 11.6 per cent of total equity sales.

The net foreign outflow for the week stood at 32.72m/- down from 191.62m/- in the week before.

Vertex International Securities Beatus Mlingi said foreign participation at the bourse has greatly improved of recently.

“…And therefore, expectations remain very high for foreign participation in the coming weeks,” Mr Mlingi said.

In the US, the Federal Reserve is this week expected to set the stage for lower borrowing costs as US inflation has taken a favourable turn and the labour market continues to soften.

The Federal Open Market Committee is poised to again hold its benchmark interest rate steady at a 23-year high of 5.25-5.5 per cent when its two-day gathering ends tomorrow.

While the rate decision itself looks to be uneventful, the meeting will serve as an important platform to further tee up a monetary policy pivot as early as September.

“The Fed is moving closer to a rate cut and its communications this week should reflect that,” said Brian Sack, the former head of the New York Fed’s Markets Group, who is now head of macro strategy at hedge fund Balyasny Asset Management.

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What has given officials latitude to more directly embrace the idea of rate cuts is clearer evidence that after many fits and starts, inflation is finally being wrestled under control.

Consumer price growth has eased meaningfully in recent months, taming fears that flared up earlier this year after an unforeseen hiccup.

Meanwhile on DSE the market reports show that the period under review saw the equity turnover falling slightly by 5.13 per cent following a slowdown in activities on the CRDB and NMB counters.

Mr Muhingo said that turnover on the two counters fell by 58 per cent and 37 per cent respectively, while a block transaction of 120,000 shares lifted the turnover on the TPCC counter approximately 20 times compared to last week.

The total equity turnover for the week amounted to 2.04bn/- compared to 2.15bn/- the previous week.

Following a block transaction, TPCC was the top mover for the week, accounting for 33 per cent of the total turnover, while CRDB and NMB both accounted for 25 per cent each.

The three counters collectively accounted for 84 per cent of the weekly turnover.

Tanga Cement was another active counter with a block transaction that saw the counter contributes 11 per cent of the turnover for the week.

Both, domestic and total capitalisation fell during the week with the latter falling by 1.53 per cent due to prices decline of both, domestic and cross listed counters.

Only one domestic counter (DSE) saw a price appreciation during the week.

On the other hand, six counters saw their prices slashed leading to 0.76 per cent shrinkage of the domestic capitalisation and Tanzania Share Index (TSI).