Strong foreign investor participation in 2014 gave regional bourses their best year on record with most investors making handsome returns, especially at Tanzania’s Dar es Salaam Stock Exchange (DSE), which was ranked Africa’s’ best stock exchange last year.
The local companies index climbed 27 per cent last year, the highest in the region.
In August last year, Tanzania removed the 60 per cent cap on foreign investors, making shares of some of the country’s largest, most profitable companies accessible to non-Tanzanians for the first time in years. The resulting inflow of foreign cash improved the bourse’s performance.
According to global financial reporting firms Bloomberg, CBS and Thomson-Reuters, the Egyptian Stock Exchange came in second with its main index achieving a 31.6 per cent increase while the Uganda Securities Exchange (USE) emerged third with a jump of 26.5 per cent. The Nairobi Securities Exchange (NSE), which emerged fourth, registered a drop, emerging at 19.2 per cent.
Tanzania’s’ DSE was also the best performing bourse in Africa in terms of market capitalisation, which grew by 40 per cent to $12.04 billion, while domestic stocks grew by 66 per cent during the year.
DSE chief executive Moremi Marwa said the results showed strong investor confidence in the bourse coupled with reforms that were working for the benefit of the Tanzania economy.
“We managed to attract foreign investors to the bourse who participated in both the equity and fixed income side of our market. We also instituted the WAN network change, which has allowed brokers to access trading and central securities depository infrastructure and extended trading hours,” said Mr Marwa.
Last year, Tanzania saw its listed equities market cap increased with the bourse managing to list three domestic companies and one cross-listing from Kenya.
“In 2014, we successfully oversaw the cross listing of Uchumi Supermarkets from the Nairobi Securities Exchange, Maendeleo Bank, Mkombozi Commercial Bank, and Swala Energy. We expect to list three more companies by the end of April, of which two will be on the Enterprise Growth Market and the other on the main exchange,” said Mr Marwa.
The year also saw the total number of listed companies on DSE increase to 22, of which 14 were domestic, seven cross-listed from Nairobi Stock Exchange and one from the London Stock Exchange. Bank of Tanzania associate director, Domestic Markets Department Paul Maganga said that removing the foreign investor cap was meant to open up the market to competition.
“We are studying the outcome of the current set up so that we see the intensity of the demand for our government securities from within the EAC. Once we do that, we will be able to open up participation in our securities to the rest of the world,” said Mr Maganga.
Previously, Tanzania only allowed investors from within the East Africa Community to purchase up to 40 per cent of offered government securities while individual countries were not allowed to purchase more than two thirds of the 40 per cent quota.
Tanzania Cement Company, the country’s second-largest cement manufacturer, was one of the best performing counters, earning year-to-year returns of 124.2 per cent. Other top gainers were Twiga, which gained 50 per cent; Tanzania Breweries Ltd, which gained 76 per cent; CRDB Bank gained 54 per cent while the Tanzania Cigarette Company gained 94 per cent. Swiss port gained 87 per cent, DCB Commercial Bank gained 47 per cent while National Microfinance Bank gained 30 per cent.
The Industrial and Allied Index grew by 78.67 per cent, boosted by Simba Cement, Twiga, Tanzania Breweries and Tanzania Cigarettes Company shares. The Bank, Finance and Investment Index increased by 37.49 per cent boosted by DCB Commercial Bank, CRDB bank and National Microfinance Bank. The Commercial Services Index increased by 48.80 per cent boosted by Swiss Port’s impressive performance.
Domestic market capitalisation at the Uganda Securities Exchange, which represents the wealth of those who put their money in Uganda’s locally listed firms, rose by 18.4 per cent last year to $1.84 billion, up from $1.2 billion in 2013. The USE All Share Index went up from 1520.68 to 1940.77, while the local share index climbed marginally to 314.35 up from 314.14 in 2013.
“The rise was driven by an increase in the market capitalisation of all counters with the exception of New Vision Printing and Uganda Clays, which dropped, while National Insurance Corporation remained unchanged,” said Uganda’s Capital Markets Authority chief executive Keith Kalyegira.
According to the CMA, the best performing stocks on the Kampala bourse last year included British American Tobacco, whose share price rose by 85.31 making a return on investment of 65.1 per cent, electricity distributor Umeme, which saw its share rise by 38.36 per cent, making a return on investment of 105 per cent.
In Kenya, the Nairobi All Share Index grew by 19.2 per cent, closing the year on a high of 162.89 points, from 136.65 in 2013. The NSE 20-Share Index, which tracks the performance of the top 20 blue-chip companies on the NSE, underperformed, delivering returns of 3.77 per cent after climbing 28 per cent in 2013.
The manufacturing and allied sector had the best performance, growing by 409.36 per cent while the energy and petroleum sectors grew by 0.8 per cent. The returns in the commercial and services and the construction and allied sectors dipped by 6.85 per cent and 1.89 per cent respectively while the telecommunications and technology sector rose 29.49 per cent, and the Growth Enterprise Market Segment grew by 0.8 per cent.
Heightened activity mid-year saw the all-share index rally up to 270 points at the fledgling Rwanda Securities Exchange (RSE), but it closed the year at 235.48 points, a slight improvement from 232.2 points in January last year.