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Uganda stock market value hit by Kenya turmoil, rush for Umeme shares

Kampala, Uganda | THE INDEPENDENT | The total value of the companies listed on the Uganda Securities Exchange (USE) dropped by 10.5 percent in the last quarter of this year (April-June) mainly due to the turmoil in Kenya, according to the Capital Markets Authority (CMA).

The total market capitalization decreased to 17.7 trillion shillings at the end of the review period, compared to 19.8 trillion recorded at the end of March 2023.

“This decline can be attributed to the decrease in market capitalization observed on five cross-listed counters (CENT, EABL, EBL, KA, and KCB) and one locally listed counter (DFCU),” says CMA in its latest report.

USE has a total of 17 listed companies, seven of them being cross-listed from the Nairobi Stock Exchange (NSE), including Centum, East African Breweries, Equity Bank, Kenya Airways and KCB Bank. The others are Jubilee Insurance and Nation Media, whose value have so far survived the headwinds.

The Nairobi 20 decreased 98 points or 5.87 percent since the beginning of 2023, according to trading on a Contract for Difference (CFD) that tracks this benchmark index from Kenya.

The value of stocks in Kenyan has been on the decline over the last one year with experts attributing it to the violent politics that have characterised the country.

Investors started withdrawing ahead if the general election last year fearing that the exercise would be violent.

It ended peacefully and there was a revamp in investments but for a short time, as the opposition politicians soon launched protests that turned violent.

This affected the capitalisation of the companies, including most of those whose shares were crossed listed onto the USE.

The Central Bank of Kenya estimated that about 340 million dollars in new investments has been lost since the beginning of the year. On the other hand, DFCU market capitalisation has been declining over the last one year, and this is also reflected in its share price.

The current share price of DFCU Limited (DFCU) is 264 shillings, having dropped by more than half from 543 a year ago, according to data at the USE, and is ranked 16th out of 17 on the USE in terms of year-to-date performance.

On an annual basis, the total market capitalization of the Ugandan stock market dropped by 10.5 percent from 19.7 trillion during the same period in 2022, as six counters cross-listed companies, except EABL, as well as DFCU, Uganda Clays, MTN Uganda and New Vision Ltd lost.

The local stock market capitalization grew 4.3 percent to between the end of March to 7.3 trillion by the end of June. This growth was led by the growth in the market capitalization recorded on five locally listed counters, namely, UMEME, SBU, CQCIL, BOBU and NIC, and this is reflected in the rise in prices of their shares on the USE.

The total market turnover at the USE grew by 40.7 percent in the second quarter of 2023, reaching 24.2 billion shillings, while the average turnover per trading session increased to 389.4 million from 268.1 million in the first quarter.

The gains in share prices was partly due to increased investor demand as many investors sought to benefit from the dividend payments offered by the listed companies. Additionally, UMEME’s rising share price reflects the growing interest from investors anticipating the government payout at the end of the concession period, according to the report.

Umeme Ltd shares are the best performing having gained 45 percent over the year to 400 shillings.