The share price of domestic stocks has stabilised after the sharp decline recorded at the end of 2015 and in January, raising hopes that the market has now found its level.

The Rwanda All Share Index has remained flat at 130.60, for the past three months, a significant drop from 140.83 in September 2015, pointing to reduced returns on investment on traded shares.

The newly listed Crystal Telecom, a Rwandan company with a stake in MTN Rwanda, has not performed as expected. During the first days of trading on the secondary market in July, the share price hit significant Rwf144 (US cents 2) mark, but as of last week, it was trading below Rwf98 (US cents 1), meaning the investors who bought the stocks in July are now counting their losses.

“If you look at other markets or companies, they are generally down. So being flat or slightly lower or higher is no surprise at this time of the year,” said Celestine Rwabukumba, chief executive of the RSE.   

Dealmakers attribute the depressed Bralirwa share price largely to speculative retail investors who were selling off the stocks at any price.

The panic brought down the prices by almost 60 per cent — from Rwf440 (US Cents 5) shortly after the share split in mid-2014—to the current Rwf174 (US cents 2).

Dealmakers blame management of Bralirwa for sparking off speculation by issuing an overstated inventory.

“Bralirwa’s June 2015 earnings release had earnings for the six months down 40 per cent at Rwf3.7 billion ($5.1 million) following the disclosure of the 2013-14 earnings overstatement relating to inventories,” says a research note by Baraka Capital Ltd, a brokerage firm in Rwanda, in association with Hartland-Peel Africa Equity.

Despite the depressed share price and low volume of trading, Davis Gathaara, managing director of Baraka Capital is optimistic that the expected initial public offerings this year could stimulate the market.

Three initial public offerings are expected at the Rwanda Stock Exchange this year, broadening the investment options across East Africa.

The EastAfrican, however, established that the three companies are among the most profitable in their sectors. They are a bank where a principal investor is liquidating interests in order to venture into other businesses and a transport company that is seeking to fund acquisition of a modern fleet. A third company involved in logistics is looking for expansion capital. The latter two are classified as small and medium enterprises (SMEs).

READ: Three IPOs expected on Rwanda bourse

“Psychologically speaking, people in January feel broke due to holidays and school fees; something similar happens with big investors since they are still waiting for results from different companies before they can make decisive moves in the new year,” said Mr Rwabukumba.

The market is eagerly waiting for the I&M Bank Rwanda IPO the delay which has dampened the mood of investors and dealmakers.

Many had hoped the stock would boost the secondary market currently suffering from depressed share prices and low volume of traded.

The government announced plans to float its shares which are slightly above 19 per cent through an IPO, but later has shelved these plans.

Efforts to find out how long the investors will have to wait for the I&M Rwanda IPO were futile as officials in the Ministry of Finance did not respond to queries.