Stanbic Holdings Ltd and DFCU Ltd have posted significant trading turnover at the Uganda Securities Exchange in the first quarter of 2019 despite the January-March low season.

Latest market data shows the DFCU Ltd counter accounted for the largest share of market turnover in February, with 46.5 per cent, equivalent to Ush303.08 million ($81,292) followed by Stanbic Holdings Ltd with a contribution of 24 per cent equivalent to Ush158.9 million ($42,620).

Bank of Baroda Uganda accounted for 3.18 per cent of total trading turnover, equivalent to Ush20.68 million ($5,547), according to figures compiled by Crested Capital Ltd.

Centum Ltd, New Vision Ltd (NVL), NIC Holdings and Uganda Clays Ltd (UCL) collectively contributed Ush7.07 million ($1,896) to overall turnover, amounting to a 1.09 per cent share; a sign of depressed trading conditions affecting the USE.

Total market turnover dropped from Ush4.52 billion ($1.2 million) registered in January to Ush651.18 million ($174,660) recorded at the end of February.

Total trading volumes fell from 47,240,204 shares recorded in January to 6,870,935 shares registered at the end of February, the data shows.

Indications of thin trading activity have affected market performance this month too.

Dull market appetite witnessed in a trading session that two weeks ago saw the bourse gross daily turnover of Ush29,000 ($7.7).

On the fateful day, only 1,000 shares were sold on the Stanbic Holdings counter at Ush29 ($0.007) each, while the other counters recorded no trades, according to USE market reports.

The January-March low season is blamed on a number of factors, including annual planning by companies and several investors, the cash “drought” faced by many households after the festive season and pending release of full year financial results by listed firms—deadline being April 30.

Nevertheless, institutional and retail investors are said to be upbeat about full year results expected from Stanbic Bank Holdings Ltd and DFCU Ltd.

Opportunities

According to Nicholas Kimuli Musaazi, an equity trader at SBG Securities Ltd, this can be explained by Stanbic’s new holding company structure that allows the bank to tap into opportunities in other sectors like real estate, ICT and mining without violating its banking licence.

“On the other hand, large investors feel DFCU Bank has gained more stability in the market after speculation about Actis’s complete exit faded away, new major funding commitments made by one of the leading shareholders and the conclusion of the parliamentary probe into the closure of some commercial banks including the former Crane bank,” said Mr Musaazi.

A block trade of Ush110 million ($29,504) on the Stanbic counter earlier this month offers clues to high institutional appetite towards the lender.

“The economy is likely to remain flat in the first two quarters of 2019 and the advent of the election season has complicated matters for government spending patterns between now and 2021,” he added.

“Other counters like NVL and UCL are suffering from supply but very little demand and this will steadily pull down their share prices,” said Benjamin Sempiira, an equity analyst at African Alliance Uganda.

The drug manufacturer has traded less than 50 million shares since it was listed in September 2018 compared with its stockmarket peers in their “honeymoon” days, according to trading reports.

Expectations of a new IPO transaction at the USE have also increased, partly because of MTN Uganda’s willingness to list on the stockmarket this year.