Bonuses and a rise in equity prices have led to rapid growth in the market capitalisation of local companies listed on the Uganda Securities Exchange.

The value of eight local companies that were listed mainly as a result of privatisation of previously State-owned parastatals has now reached Ush3.62 trillion ($1,27 billion).

“Of the local listed companies, Stanbic Bank Uganda (SBU) is the largest in terms of market capitalisation, at 6.8 per cent, which represents Ush1.69 trillion ($600 million),” USE trade manager Andrew Mwima said on February 9.

SBU is followed by Umeme at 3.31 per cent, British American Tobacco Uganda (BATU) at 1.48 per cent, Development Finance Company of Uganda Bank (DFCU) at 1.3 per cent and Bank of Baroda of Uganda (BOBU) at 1.2 per cent. 

Market capitalisation rose after the National Insurance Corporation (NIC) made a bonus issue at a ratio of 11 new shares for every eight shares held.

“This increased the number of outstanding shares the company had issued to the public. The company also had a rights issue in which it sold some more shares to the public,” Mr Mwima said.

NIC’s issued shares rose to 1,415,779,718, and its market capitalisation was Ush25.48 billion ($9 million). DFCU Bank also made a 1:1 bonus issue which doubled its share count to 497,201,822, while market capitalisation reached Ush355 billion ($126 million).  

“The company’s share price registered modest gains with the investment community expecting that the company would maintain its good performance this new financial year,” Mr Mwima said, adding that Umeme also had a positive price movement when its stock price soared from Ush340 ($0.12) to Ush510 ($0.18), a development attributed to the company’s favourable dividend policy, which attracted foreign investors.

Research analyst at African Alliance Uganda Ltd Liz Karungi said the USE market cap is rising due to an increase in prices of the listed companies.

“Since the beginning of the year, companies that have seen price increases are Bank of Baroda, which started the year at Ush118 ($0.041), and rose to Ush120 ($0.042); British American Tobacco went up from Ush7,505 ($2.661) to Ush7,520 ($2.666), and DFCU, which began the year at Ush701 (0.248), is currently trading at Ush711(0.252),” she said.

As at January 31, Uganda’s market capitalisation stood at Ush27.4 trillion ($9.4 billion). This includes both locally listed and cross-listed companies. Market capitalisation stood at Ush20.3 trillion ($7.2 billion) a year ago; the market has thus registered a growth of 37 per cent.

USE’s market capitalisation is dominated by EABL at 26 per cent, Equity Bank at 23 per cent, KCB at 20.32 per cent and Stanbic Bank Uganda at 6.8 per cent.

“These four companies take up 76 per cent of the net worth of the USE’s market cap, and are the largest asset base of the 16 listed companies on the market,” said Mr Mwima.

He added that the four companies have had a large impact on the USE’s All Share Index (ALSI) and local share index (LSI).

“A small price change in a large company like Stanbic Bank will have a large impact on both the ALSI and LSI; for instance, when the Stanbic shares rose from Ush30 ($0.010) to Ush33 (0.011), the LSI moved from 261 to 320,” he said.

Mr Mwima added: “Between January 31, 2014 and January 31 this year, SBU moved from Ush30 ($0.010) to a high of Ush35 ($0.012). This is why the LSI has moved to an all-time high of 320 from 260 a year ago.”

The chief executive officer of Crested Capital, Robert Baldwin, said market capitalisation usually moves in tandem with company performance.

“As the listed companies release their 2014 results in March and April, we can expect movement in share prices, which in turn will affect market capitalisation. The trend in recent years is positive. But past performance does not guarantee future results,” Mr Baldwin said.