CEO’s QUARTERLY NOTE (Q3, 2015)

 

CEO’s QUARTERLY NOTE (Q3, 2015)

The Dar es Salaam Stock Exchange PLC (DSE) recorded mixed performance during the quarter – total market capitalization and the DSE Index which tracks all listed shares declined by 7 percent, from TZS 23.9 trillion as of 30th June 2015 to TZS 22.2 trillion at the close of the quarter, on 30th September 2015. The domestic market capitalization and indices also recorded a decimal decrease of 1 percent. The domestic market capitalization decreased from TZS 9.9 trillion as of end of Q2, 2015 to TZS 9.8 trillion as of 30th September 2015.

DSE listed companies’ valuations and trading activities were partly affected by the depreciation of shilling compared to US dollar – this had a negative impact on investors’ returns (as measured in US$). As a result, foreign investors’ activities on the buy-side remained the same as was in Q2 – at 86 percent of out total trading activities while sale-side activities declined significantly, from 41 percent in Q2, 2015 to a mere 8 percent this quarter.

Market liquidity (trading turnover) also recorded a decline from TZS 278 billion Q2, 2015 to TZS 222 billion during this quarter. However, on the annualized basis, our turnover, currently at TZS 785 billion, has the potential to reach 11 percent liquidity ratio – this liquidity level will potentially be almost 10 times compared with our previous history, as compared to our domestic market capitalization

We were also down by 2 percent on the domestic counters valuations. Our Weighted Average market Price Earnings Ratio for domestic listed companies was 16.93 times as of end of September 2015 compared to the trailing PE ratio of 17.31 times during last quarter. The Weighted average Price/book value remained the same at 4.6 times. Similarly, the trailing weighted average dividend yield remained at 3.1 percent as was in the previous quarter.
As for the bonds market segment – there was a significant decrease in turnover during the quarter: Bonds trading turnover was TZS 30 billion (on cost basis) versus TZS 75 billion in the previous quarter. On the listings side, there were two listings during the quarter: PTA Bank listed a Corporate Bond worth TZS 32.6 billion; CRDB Bank PLC also listed additional 435 million shares worth TZS 152 billion following the bank’s rights shares issuance during the quarter.

During Q4, 2015, we expect at least three listings: Mwalimu Commercial Bank, Mufindi Community Bank and YETU Microfinance.
During Q3, 2015, as was planned and communicated – we introduced the mobile trading platform in our Automated Trading and Central Securities Depository infrastructure. This initiative enables investors to buy and sale listed shares using their mobile phones. As at the end of quarter (a month following the launch) about 700 investors had already accessed our infrastructure using their mobile phones. We envisage the increase in number of mobile trading platform as more people get to know the existence and operability of this technology.

Our top priorities during the coming quarter include: encourage more listings, public education and awareness, integrating and synchronizing our Central Securities Depository (CSD) to that of Bank of Tanzania for government bonds trading. Our demutualization process is now at the advanced stage, we have selected Advisers in the Issue who will start and probably accomplish the assignment before end of Q4, 2015.