CMA optimistic about equities performance
Posted Thursday, January 17 2013 at 10:36
Slow down. Uganda’s equity markets just like others experienced a slow down as a result of the Eurozone volatilities.
The Capital Markets Authority is optimistic that Uganda’s equity markets will make full recovery this year due to stability of the country’s macroeconomic and global economic dynamics.
Like many equity markets Uganda registered a slowdown in macroeconomic indicators like high inflationary shocks, volatile exchange market, and high lending rates factors that have a direct correlation in the stock market performance.
The slowdown in global economic growth during 2012 also weakened international capital flows to frontiers markets like the ones including ones in Sub-Saharan Africa.
In an interview Mr Japheth Katto, the CMA chief executive officer, said: “We remain upbeat that the capital markets industry will recover fully in 2013. We expect more IPOs and secondary offers in 2013.”
However, he added the recovery process will be dependent on continued low inflation and interest rate environment, a stable shilling, stability in the Euro-zone and deepening of the regional integration process.
For more than three years CMA has actively promoted alternative investment markets in Uganda’s capital market industry including private equity, which is critical for the preparation of SMEs.
However, there is need for formulation of policies that will encourage development of the market and enhancement of the public education programme to stimulate both supply and demand.
Mr Katto said CMA also plans to promote other investment classes such as asset backed securities, and derivatives as a way of diversifying the investment opportunities in the Ugandan capital markets.
For over five years, Uganda’s equity markets chief executives in East Africa have been working on the integration of the markets into a single East Africa stock exchange with a view of increasing liquidity, which is still low in the region.
Mr Katto said regional co-operation remains a critical component in the development of the Ugandan capital markets.