Active participation of foreign investors in equities propelled a fivefold jump in turnover on the Uganda Securities Exchange in the second quarter of 2015, compared with the same period last year.

The USE reported a turnover of Ush52.34 billion ($14.1 million) compared with Ush10 billion ($2.7 million) in quarter 2 of 2014.

Power distributor Umeme’s counter contributed 86.71 per of the turnover, followed by DFCU at 10.4 per cent, Stanbic at 6.5 per cent while National Insurance Corporation (NIC), Bank of Baroda Uganda (Bobu), New Vision Printing and Publishing Company Ltd (NVL), Centum and Uganda Clays, each weighed in at less than 0.5 per cent.

The volume of shares traded reached 202 million, a 53 per cent rise over the 132 million shares traded in the same period last year.

According to USE chief executive officer Paul Bwiso, the capital markets have been bullish since the beginning of the year, which has attracted foreign investors.

“A large number of shares were being offloaded in the market, which foreign investors considered cheap and worth investing in because of the good valuation of the companies,” said Mr Bwiso.

Mr Bwiso said participation was mostly from fund managers and brokers from Europe especially from the UK and African countries such as South Africa and Kenya.

“These international investors were mainly investing in Umeme, DFCU and Stanbic bank shares because they consider the valuation of these companies’ shares good,” he said. 

Mr Bwiso said Uganda’s macroeconomic environment has been good, with the GDP growth rate relatively high. The GDP has been growing at 5.8 per cent, boosting foreign investors’ confidence in Uganda’s capital markets. 

The all share index (ALSI) opened at 2084.18 at the beginning of the second quarter, hitting a high of 2079.3 in mid-April. It hit lows of 1917.56 in mid-May and closed at 1995.63 on June 30, an overall decline of -4.2 per cent.

The trade manager of USE, Andrew Mwima, said the drop in the ALSI value was due to a drop in prices of six- cross listed stocks and three local counters.

“Uchumi share price, for example, dropped by 13.83 per cent, while Kenya Airways shed 9.33 per cent during the period. There were, however, huge gains on the Centum stock, which appreciated by 8.25 per cent, and the Jubilee stock, which appreciated by 5.08 per cent,” he said.

Automated trading

USE started automated trading on July 20, a development that has created optimism among players.

“We still expect the market to perform well. The future prospects are good due to automated trading, which is encouraging online trading of shares. Since we started, the turnover has increased by Ush17 billion ($4.6 million) in less than two months. The other thing that will see the market performing well is mobile trading in the stock exchange, which is likely to start this year in October,” he said. 

A research analyst at African Alliance Uganda, Arthur Nsiko told The EastAfrican that the demand and supply of shares has been sufficient, which has seen constant activity in the market, leading to the good performance of the market in the second quarter of 2015.

“The listing of Umeme and Stanbic opened up Uganda’s stockmarket to foreign investors,” he said.