African Alliance Uganda could emerge as the most profitable stockbroker at the Kampala bourse.
Unaudited figures obtained by The EastAfrican show that most stockbrokers expect to return a profit for 2013, on the basis of block trades driven by institutional investors in a period of significant recovery for industry players.
African Alliance Uganda recorded a 42 per cent share turnover out of the total of about Ush493 billion ($198.5 million) recorded at the Uganda Securities Exchange (USE) in 2013; CfC Stanbic Financial Services Uganda posted a 40.82 per cent share.
Dyer and Blair Uganda Ltd and Crested Stocks and Securities Ltd accounted for six per cent and four per cent share of total turnover respectively.
The share of total turnover at the bourse directly determines a stockbroker’s earnings, which are pegged to commission incomes on the value of each transaction.
CFC Stanbic Financial Services Uganda generated 42.55 per cent of total trading volumes for 2013, estimated at 4.7 billion shares, followed by African Alliance Uganda with a 35 per cent share.
Dyer and Blair Uganda and Crested Stocks and Securities registered 10 per cent and seven per cent share of total trading volumes respectively.
UAP Financial Services Uganda, a subsidiary of UAP Insurance Uganda, came last out of eight stockbrokers, with less than one per cent share of total market volumes and turnover.
Analysts predict African Alliance Uganda could declare profit before tax of about Ush700 million ($282,031) for 2013, up from a loss of Ush931 million ($375,101) posted in 2012; CfC Stanbic Financial Services Uganda anticipates a net turnover of Ush1.5 billion ($604,351).
Large block trades done on the DFCU Ltd, Umeme Ltd and British American Tobacco Uganda (Batu) counters boosted trading incomes of African Alliance Uganda and CfC Stanbic Uganda Financial Services.
African Alliance Uganda and CfC Stanbic Financial Services Uganda executed a Ush111 billion ($44.7 million) deal in April 2013 that saw Actis sell 44.5 per cent of its shares in DFCU Ltd to Norfund of Norway and Rabobank of Netherlands, leaving the British private equity firm with a 15 per cent shareholding.
African Alliance Uganda also participated in the Ush10.7 billion ($4.3 million) block trade involving two million shares on the Batu counter in September, which resulted in the tobacco firm’s share price surging from Ush2,965 ($1.17) to a record high of Ush4,000 ($1.58).
CfC Stanbic Financial Services Uganda also executed a block trade on the Umeme counter valued at Ush34 billion ($13.7 million).
“CfC Stanbic Financial Services Uganda dominated trading volumes mainly because of substantial activity on the Umeme counter, but African Alliance Uganda took the lead on turnover levels due to the block trade on the Batu counter coupled with sizeable transactions done on very liquid counters like Bank of Baroda and New Vision Ltd,” said a source at the USE who requested anonymity citing confidentiality rules.
Paul Bwiso, the general manager of Dyer and Blair Uganda Ltd, said, “Smaller firms did not benefit from institutional trades, and this forced us to exploit retail transactions. Going forward, we intend to concentrate on back office transactions like debt restructuring deals to boost our profits in 2014.”
UAP Financial Services Uganda concentrated on its unit trust products, leading to dull trading performance last year.
“Growth of the unit trust products will eventually generate significant business recovery in the medium term,” said Patrick Ndonye, the company’s CEO.