What you need to know:
- In details contained in its Quarterly Bulletin, CMA noted that domestic market capitalisation declined from Shs4.33 trillion for the period ended June to Shs4.28 trillion
The Capital Markets Authority (CMA) has said a drop in share prices of locally listed companies saw the size of Uganda Securities Exchange (USE) decline by 1.3 per cent for the period ended September.
In details contained in its Quarterly Bulletin, CMA noted that domestic market capitalisation declined from Shs4.33 trillion for the period ended June to Shs4.28 trillion.
The decline, CMA said, was mainly driven by share price losses registered on seven locally listed counters in which NIC registered the largest decline followed by Cipla Quality Chemicals, New Vision and Umeme.
During the period, NIC registered a 15 per cent share price loss while Cipla, New Vision and Umeme registered a 5 per cent, 4.2 per cent and 4.1 per cent losses, respectively.
Bank of Baroda registered a price loss of 2.5 per cent while dfcu and Stanbic Bank registered 1.4 per cent and 0.5 per cent losses respectively.
The poor performance on the NIC, Cipla and New Vision counters, according to CMA was mainly due to negative market sentiment due to Covid-19 disruptions, poor financial results and low return on equity.
However, the decline among banks, many of which reported growth in profit margins for the 2021 half year, among which included Bank of Baroda, Dfcu and Stanbis, was due in part, to Bank of Uganda directives demanding deferral of dividend payments for the period ended December 2020, according to CMA.
In April last year, the Central Bank directed all supervised financial institutions to defer payment of all discretionary payments, among them dividends and bonuses, to retain enough capital buffers as well as reserve money for the real economy.
However, CMA said, on an annual basis, the size of the domestic market grew by 0.3 per cent due to an increase in the share prices of two locally listed counters, among them Stanbic Bank and Uganda clays which registered a price expansion of 9.9 per and 6.3 per cent, respectively.
Across East Africa, CMA noted, domestic market capitalisation at the Nairobi Stock Exchange grew by 0.7 per cent to $25.2b from $25.06b as of June 30.
The increase was mainly driven by share price gains on the Safaricom counter on the prospect of expansion into Ethiopia and banking stocks, which were buoyed by prospects of improved earnings.
During the period, according to CMA, domestic market capitalisation at the Rwanda Stock Exchange fell by 5.4 per cent to $0.6b from $0.64b in period ended June.