Analysts predict increased investment in emerging markets through stockmarket transactions up to December, caused by a surge in foreign investor interest. As a result, the four East African bourses are likely to see higher demand for stocks, pushing prices up.
Advisers and stockbrokers in Kigali, Nairobi, Kampala and Dar es Salaam are finalising equity and debt transactions meant to raise funds for expansion and fulfillment of new capital requirements set by regulators.
Activity at the bourses, as seen in key indices, has been rising over the past weeks, riding on increased investor participation.
The value of all firms listed on the Nairobi Securities Exchange (NSE) edged close to the Ksh2 trillion ($23 billion) mark as high demand for stocks continued to push prices up.
Data from the DSE shows that the value of all 12 local listed companies — as measured by domestic market capitalisation — more than doubled to Tsh5.96 trillion ($3.7 billion) at the close of trading on Thursday, up from Tsh2.94 trillion ($1.87 billion) at the close of last year.
In Uganda, the National Insurance Corporation (NIC) has started trading of rights shares to raise funds for new capital requirements introduced by the insurance regulator through a rights issue valued at Ush8.4 billion ($3.3 million), equivalent to 323,104,000 shares worth Ush5 ($0.002) each.
Kakira Sugar has opened the offer process for its $30 million corporate bond scheduled for listing next month. The Dar es Salaam bourse approved the listing of Swala Energy, an Australian mining company, on its enterprise and growth market (EGM) segment two weeks ago.
Steady foreign interest in regional stockmarkets has seen their indices rise significantly this year, alongside the turnover. The NSE 20 Share Index rose from 4,140.3 points at the beginning of February, to 4,793.20 points at the end of September.
The value of all NSE-listed firms averaged Ksh1.99 trillion ($22.96 billion) last week, close to setting a record, on high demand from foreign and local investors.
READ: Dar domestic market cap doubles as Nairobi edges towards $23bn
The USE’s main index also increased from 1,226.27 points to 1,654.04 points during the same period, a 6.5 per cent monthly growth. The top three performing stocks at the Uganda Securities Exchange last week were British American Tobacco Uganda, which has gained 76.86 per cent this year and closed at Ush4,050 ($1.61), Stanbic Bank Uganda, up 50 per cent to Ush30 ($0.01), and Umeme up 37.45 per cent to Ush378 ($0.15).
At the Rwanda Stock Exchange, the best performing stock has been Bank of Kigali, which closed at Rwf250 ($0.38), having risen 96.85 per cent from Rwf127 ($0.21) at the beginning of this year. Bralirwa, which closed at Rwf848 ($1.27), has gained 34.6 per cent from Rwf630 ($1.05) at the close of last year.
At the NSE, shares whose prices had more than doubled by the close of trading on Wednesday were CfC Stanbic at Ksh85 ($0.98), ARM Cement at Ksh89.50 ($1.03), Britam at Ksh16.35 ($0.19), Liberty Holdings at Ksh15.75 ($0.18), Pan Africa Holdings at Ksh96.50 ($1.11), Centum at Ksh31.25 ($0.36) and Safaricom at Ksh11 ($0.13).
The DSE said market activity was skewed towards foreign investors. They said activity was focused on National Microfinance Bank (NMB) and CRDB Bank.
The Tanzania Share Index (TSI) — which tracks the prices of local stocks only, excluding cross-listed shares — averaged 2,837.44 points last week, a 102.33 per cent gain from its close of at the end of last year of 1,402.38 points.
The All Shares Index — which tracks prices of all shares including cross-listed ones — closed at 1,909.91 points, a 29.14 per cent gain from its close at the end of last year of 1,478.99 points.
Analysts at Tanzania Securities Ltd, in an end of day brief to investors, said the indices edged further up supported by the price increase in Tanzania Breweries Ltd (TBL).
TBL, on Tuesday, announced that it will pay half of its six months net income of Tsh43.35 billion ($26.9 million) in an interim dividend to investors who will be on the register by December 19, which translates into Tsh150 ($0.09) per share.
Increased foreign investor participation in the NSE in recent weeks resulted in the dramatic performance of Safaricom and Umeme shares.
“Foreign investors have shown significant interest in Umeme shares because of notable growth in generation capacity and revenues posted in the first half of 2013.
“Despite persistent controversy over its concession, investors feel that the risks of termination are still minimal, and are eager to reap from regular dividends declared by the company,” said Amanda Bbosa, an equity analyst at African Alliance Uganda.