Where investors reaped big in 2021

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By Josephine Christopher

Dar es Salaam. When the year 2021 started, a share of the Tanga Cement Company Ltd (TCCL) at its Dar es Salaam Stock Exchange (DSE) trading counter was selling at Sh500. At the close of the year, the same share was being sold at Sh1,100, more than twice as much in value.

The appreciation in value of the TCCL shares by 120 percent during last year is only one small example of how the wealth of investors in the form of equities virtually swelled in 2021 – thanks to DSE’s sterling performance.

Generally, investors’ wealth is measured by the total market capitalisation of the Stock Exchange, which increased to Sh15.81 trillion in 2021: a rise of five percent – thanks to increases in the prices of the shares of some companies, as well the listing of new shares in the market.

The DSE has 28 listed companies, both local and cross-listed with the Nairobi Securities Exchange (NSE). The wealth of the 22 local firms was estimated at Sh9.43 trillion at the end of 2021. An analysis by The Citizen indicated that the trading counters of 10 companies contributed to the increase of the wealth, including six domestic company counters.

Apart from the Tanga City-based Tanga Cement investors – whose wealth increased by 120 percent – other counters which improved in their shares trading included the self-listed DSE (whose shares price increased by 47.72 percent, rising to Sh1,300 a share), and the Dar es Salaam-based Twiga Cement, whose shares trading improved by 36 percent, rising to Sh3,400 apiece.

The improved stock prices of the two cement firms started in October last year after Scancem International DA (‘Scancem’) – a subsidiary of Heidelberg Cement AG which owns Twiga Cement – announced plans to acquire Tanga Cement.

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The National Investment Company Limited (Nicol) also contributed to DSE’s good performance after its shares price surged by 62 percent, rising to Sh300 apiece. Also, the CRDB Bank’s shares price increased by 43.5 percent, to Sh280 each.

The shares of Tanzania Oxygen Ltd (TOL) also gained in value by 3.6 percent, rising to Sh570 per share in 2021.

The cross-listed firms which contributed to the increase in wealth at the DSE (their percentage growth shown here in brackets) were the National Media Group (NMG; 17.4 percent); Jubilee Holdings Limited (7.5 percent), East African Breweries Limited (3.7 percent) and KCB Group (13.5 percent).

Speaking to The Citizen, the DSE chief executive officer, Mr Moremi Marwa, said the price appreciations at those trading counters pushed up the market size, to Sh15.8 trillion. “The market trends give a positive outlook this year,” Mr Marwa said.

The chief executive officer of the brokerage firm Zan Securities Limited, Mr Raphael Masumbuko, said that the year 2021 saw strong corporate profits bolstered by exuberant consumer spending in the backdrop of trade resumption in different sectors of the economy.

“The underlying narrative is positive, with the expectation that we will see another year of strong corporate revenues, earnings growth and excess cash flow generation in 2022,” he said.

Best losers

Trading counters, which lost in 2021 included the agri-business firm, Jatu PLC, whose stock prices dropped by 87.4 percent, falling to Sh410 a share.

The Jatu PLC general manager, Mr Mohamed Simbano, told The Citizen that the company’s share prices fluctuated due to the nature of the agricultural business in which they are engaged, and the type of investors involved.

“Most of our investors are smallholders and traders who buy a few shares. But, we expect the price to improve as demand surges during the coming harvest season,” said Mr Simbano.

Other losers (and their percentage drop shown in brackets) are NMB Bank (14.54 percent); Swissport (10.7 percent); DCB (28.3 percent), and Yetu Microfinance (7.2 percent).

In terms of liquidity, the local stock market (DSE) recorded a Sh2.72 trillion turnover, out of which Sh104 billion was from traded equities, while Sh2.57 trillion was the turnover from bonds, according to Mr Marwa.

“The amount is an increase from the Sh2.68 trillion that was recorded in 2020, whereby Sh591 billion was from equities, while Sh2.12 trillion was from bonds,” he said.

The DSE boss said firms from the industrial and allied sectors of the economy performed well in 2021, constituting 47 percent of the turnover. These were followed by the financial sector, constituting 45 percent of the turnover.

“Counters with the highest activities included TBL, TCC, Twiga Cement, TOL and Tanga Cement. In the financial sector, we had CRDB Bank, NMB Bank and DSE as top movers,” he said.

With the introduction of the 25-year Treasury bond for the first time in the Tanzanian financial markets, long-term government assets were investors’ safe haven in 2021. The government securities which are issued primarily by the central Bank of Tanzania (BoT) and in the secondary market by the DSE, indicated high appetite and reported record oversubscriptions.

Demand for the securities was largely due to their high returns – which investors consider higher than the dividends that are offered by ordinary companies.

For instance, on Wednesday – November 24, 2021 – the BoT raised Sh661 billion from 1,341 bids tendered by prospective investors against an offer of Sh139 billion for the 20-year bond.

That amount was the highest-ever tendered in a single Treasury bond auction in the country’s history.