Corporate action to slow DSE equities market activity

The market analysis report by Exodus Advisory, the DSE’s broker and member, says the majority of the counter prices have also declined post ex dividend trading date.

“In general, the domestic market has observed a decline as a result of corporate actions undertaken by prominent domestic companies,” the firm says.

Consequently, it is anticipated that dividend investors will opt to either divest or maintain their positions for the foreseeable future.

“As such, the market is expected to shift towards fixed income market,” according to the broking firm.

“As the market shifts away from the equities market, demand for fixed income securities is expected to increase. Given that is the last month of the government year, there is expected to be high demand in the last bond auctions.”

The upcoming auctions include the 20 years and 25 years Treasury bonds and they are expected to trade at a discount.

“Due to lower demand for the other tenors, we expect the central bank to continue accepting significantly more bids than amount tendered,” Exodus Advisory says.

On the money market side, banks are expected to mobilize deposits as they expect to close the second quarter for the year ended 2023, it says.

“This presents an opportunity to negotiate better deposit rates for institutional and high net worth investors,” the report notes.

In its monthly market analysis report, the broking firm says the stock market recorded significant activity in the month of May where market turnover increased by 146.40 percent.

This primarily resulted from stock demand spurred by release of earnings and payment of dividends.

However, total market capitalization declined by 2.42 percent moving to 15,193bn/- by end month while Domestic market capitalization decreased by 0.81 percent in the same period.

This resulted from fall in share prices after the stocks began trading post corporate actions.

Similar to the market cap performance, All share index (DSEI) declined from 1,867.18 points to 1,821.99 points while the Tanzania share index decreased by 0.81 percent.

This indicates that both local and cross listed counters recorded a negative performance in the period.

The banking sector recorded the lowest performance where the Banking sector index declined by 4.17 percent. Commercial services followed with a drop of 0.19 percent.

However, Industrial & Allied recorded a positive performance growing by 0.91 percent.

Locally, TCCL recorded the highest appreciation of 69 percent followed by DSE (6 percent), NMB (4 percent) and TPCC (0.5 percent).

On the other hand, CRDB recorded the lowest performance falling by 14.81 percent followed by JATU (8.62 percent).

Meanwhile, DSEI gained by 1.45 points to close at 1,841.20 points during the opening of the week, compared with 1,839.75 points recorded during the last trading of last week.

The slight increase resulted from the appreciation of two cross listed companies including Nation Media Group (NMG) and East Africa Breweries Limited (EABL), which are originally listed at the Nairobi Securities Exchange (NSE).

The DSE daily market report shows EABL share price closed at 2,780/- on Monday this week, an increase of 0.72 percent, compared with 2,760/- recorded during the close of last week, pushing its market capitalization to 2.19trn/- from 2.18trn/- respectively.

Nation Media Group (NMG) share price went up by 1.49 percent after closing at 340/- on Monday this week, compared with 335/- recorded during the end of last week. The trend also pushed up the media company total market capitalization to 64.10bn/- compared with 63.16bn/- respectively.

The company board of directors recently proposed a dividend of Ksh1.50 per share for the year ended 31st December 2022.

Also, NMG board resolved to buy back 10 percent of issued shares subject to regulatory and shareholder approval.

“This may suggest that the company believes the share is undervalued and expects higher future prospects for the counter,” says the market analysis by Exodus Advisory.