New Ugandan bourse online portal to spur more trading
Posted Friday, March 17 2017 at 14:10
- Easy Portal directly helps investors to trade shares without hiring stockbrokers.
- However, sluggish growth evidenced in IPO subscriptions in recent times could impact investor uptake on the Easy Portal window, observers say.
- Overall investor participation in the stockmarket remains low, which is attributed to a pool of dormant investors registered on the CDS platform. Financial experts blame this trend on limited stockbroker engagement with small clients and passive investment behaviour exhibited by many retail players.
The Uganda Securities Exchange has rolled out an online trading window — Easy Portal — that offers investors opportunities for faster transactions at no fee to spur trading activity.
But a scarcity of equity listings and limited investor participation could work against the initiative.
Easy Portal directly helps investors to trade shares without hiring stockbrokers.
Stocks traded on the USE are charged a commission of 2.1 per cent that is shared between the stockbrokers, the bourse, the Capital Markets Authority and the Investor Compensation Fund, among other agencies.
To trade, investors will log in their Central Depository System account numbers, their national identification card numbers and view the prevailing stock prices before choosing trading options.
The trading window also contains an initial public offering (IPO) application, a critical aid for handling investor documents usually submitted during public equity offerings.
Investor statements issued by this facility will be saved for a maximum of six years, the bourse said. However, investment costs tied to this trading portal could not be confirmed by press time.
Low IPO growth
However, sluggish growth evidenced in IPO subscriptions in recent times could impact investor uptake on the Easy Portal window, observers say.
IPO growth usually attracts more investors to stockmarkets and in turn, boosts trading activity as new investors seek to exploit fresh opportunities available at the bourse.
The low IPO growth at the USE can be traced back to 2012. While DFCU Ltd and New Vision Ltd were listed in and also recorded oversubscription of about 50 per cent, Stanbic Bank Uganda was listed in 2007 following a successful IPO that was oversubscribed three times, according to industry data.
NIC Holdings Ltd was listed on the USE in March 2010 while Umeme Ltd made its trading debut on the local bourse in November 2012. After five years of Umeme Ltd’s listing on the local bourse, the USE has struggled to attract new IPOs with proposed transactions being cancelled by issuers while others have been put on hold.
Nevertheless, the bourse is exploring IPO opportunities among some government-owned financial institutions that possess reasonable growth forecasts.
“We have been mobilising a set of pipeline IPO deals in previous months but challenges being faced by targeted companies and some corporate governance issues have delayed implementation of this venture. For instance, some of the identified businesses have issues with filing taxes and this affects the quality of listings expected by large international investors. That is why we need patience on this matter,” said Paul Bwiso, chief executive officer at the USE.