What you need to know:
According to a report from Capital Markets Authority, equity turnover fell to Shs17.3b for the period ended June from Shs115.4b recorded in the 2019/20 financial year.
Equity markets experienced a sharp drop in daily turnover, declining by Shs395.4m during the period ended June 30, according to a report by Capital Markets Authority (CMA).
The drop, which was attributed to muted activity from off-shore investors, indicates that during the period between July 1, 2020 and June 30, 2021, daily market turnover declined to Shs70.9m from Shs466.3m in the period ended June 2019.
The report, which was released on Wednesday, also indicates that the drop impacted annual turnover, which contracted by Shs98.1b, a record decline in the history of Uganda’s equity trading.
During the period, according to the report, equity turnover, which accounts for the total value of shares traded, fell by 85 percent to Shs17.3b from Shs115.4b recorded in the 2019/20 financial year.
The drop, CMA noted, was due to among others, muted participation from both domestic and off-shore investors. Offshore investors, who account for more than 80 percent of market activity, have largely been absent due to risks associated with uncertainties occasioned by Covid-19.
Mr Keith Kalyegira, the CMA chief executive officer, said the report, which seeks to provide insights into activities of Uganda’s equity markets, compares statistical data to offer investors and the general public an overview of evolving trends within the capital markets.
During the period, the report noted, the Uganda Securities Exchange (USE) capitalisation grew by 9.2 percent to Shs20.84 trillion from Shs19.09 trillion.
The growth was mainly attributed to gains registered on share prices of five cross-listed and two local counters, among them Nation Media Group, Equity Bank, Kenya Commercial Bank, Jubilee Holdings, Kenya Airways, Stanbic and Bank of Baroda.
The report also noted that domestic market capitalisation, when measured as a percentage of gross domestic product, fell from 3.4 percent at the end of the 2019/20 financial year to 3.3 percent, due to the fact that GDP growth outpaced expansion in domestic market capitalisation.
The report also noted that over the last five years, USE equity turnover has decreased by 31.9 percent on an annualised basis from Shs117.9b in the period to June 2017 to Shs17.3b.
However, during the period, the report noted, the USE All Share Index increased by 9.4 percent to close at 1,094 from 1,000 points recorded at the end of the previous financial year.
This was on account of price gains registered on five cross-listed and two local counters, among them Nation Media Group, Equity Bank, Kenya Commercial Bank, Jubilee Holdings, Kenya Airways, Stanbic and Bank of Baroda.
The USE Local Counter Index grew by 1.6 percent closing at 1,016 points from 1,000 points due to gains in the share prices of Stanbic, which expanded by 10.4 percent and Bank of Baroda which grew by 9.1 percent.
Gains and losses
During the period, only two locally listed counters registered gains in share price performance with the Stanbic share price expanding by 10.4 percent while Bank of Baroda gained by 9.1 percent to close the year at Shs26.5 and Shs120 from Shs24 and Shs110, respectively.
The report further reveals that the share prices of five counters registered price losses with National Insurance Corporation, posting the heaviest loss to close the review period at Shs6 from Shs9, which represents 33.3 percent drop.