Uganda Security Exchange (USE) has posted the worst performances in over four years with turnover grossing a 70 per cent drop.
In the second quarter of 2020, turnover dropped to Shs2.25b compared to Shs25.61b in the same period last year.
The drastic drop, according to a report by USE, was attributed to withdrawal of international investors as they sought safe option to shield their investments against Covid-19-related effects.
The USE has also experienced a drop in share prices of stocks and a large drop in counter activity.
Turnover, which is the total value of stocks traded during a specific period, is a good indicator that drives investor confidence.
During the fact behind the figures briefing last week, Mr Paul Bwiso, the USE chief executive officer, said the period under review had also seen a drop in opening of new Securities Central Depositary accounts, stock prices and a delay in audit completion and reporting.
“Besides an improved start to the year compared to 2019, quarter two of 2020 has posted the lowest turnover over the last four years. June posted the least turnover of just Shs279.8m,” he said.
During the period, Mr Bwiso said, Umeme dominated trading, taking up 87.4 per cent of the total market turnover, which translated to real trading value of Shs1.97b.
Ms Anita Kwikiziza, a stock broker with UAPOM-FS, told Daily Monitor that many institutional investors had in the period sought to tap into Umeme’s attractive dividend yield that stood at 16.8 per cent.
Umeme also dominated activity in June, the last month of the period, with 70.63 per cent of the total turnover.
The counter, she also noted, has had good price movements and therefore investors have been seeking to tap into the price changes for relatively a higher gain.
NIC posted the least performance, trading 185,321 shares, representing a turnover of Shs1.7m. This was just 0.1 per cent of total turnover during the period.
Stanbic Bank traded 6,382 shares worth Shs153.19m (6.8 per cent total turnover) while Bank of Baroda contributed 4.2 per cent of total turnover.
The two banks also posted the largest share of turnover with Stanbic contributing 22.69 per cent while Bank of Baroda contributed 3.75 per cent.
During the quarter, Stanbic Bank posted improved activity, according to Ms Kwikiziza, due to a prior dividend of pay-out of Shs2.15.
“Good projections of the future attracted both existing and new buyers as it provided a foundation for confidence,” she said.
Dfcu Bank contributed Shs94m, representing 0.1 per cent, while Cipla Quality Chemicals and Uganda Clays contributed 1.2 per cent and 0.2 per cent of total turnover, respectively.
All Shares Index
All Shares Index rose by 3 per cent in the period from 1,329.65 points in April to 1,369.84 points in June due to price increment on Kenya Airways, East African Breweries Limited and Centum.
However, Local Company Index fell by 0.9 per cent from 342.21 points in April to 339.17 points in June due to a price drop on Bank of Baroda counter.
USE has 17 listed companies, nine of which are cross-listings from Kenya.
During the period, according to Mr Bwiso, USE’s total market capitalisation to June stood at Shs19.089 trillion.