More accounts opened as players suggest ways of boosting market activity
Kampala, Uganda | JULIUS BUSINGE | There is good news at the Uganda Securities Exchange. The latest market report shows that the number of depository accounts being opened is on the upward trend, signaling a growing interest by the public to invest on the stock market.
Data from the Uganda Securities Exchange shows that the number of depository accounts for the first four months of the year to April, has increased from 33,586 in 2018 to 33,968 in 2019.
There were 25,721 accounts during the same period under review in 2015.
Market analysts say the trend reflects the growing interest by the public, investors to participate in market activities amidst the quietness in the market.
According to the report, local individuals account for the biggest portion of accounts held in the depository, followed by the East African companies.
Individual local accounts accounted for 75%, East African companies (13%), foreign individuals (5%), foreign companies (4%), local companies (3%) and East African individuals (1%).
Market capitalisation stood at Shs24.8trillion, with the top five companies including British American Tobacco (Shs1.4tn), East African Breweries Limited (Shs6.4tn), Equity Group (Shs5.4tn), KCB Group (Shs5tn), and Stanbic (Shs1.4tn) having the majority stake.
In terms of turnover by client category, foreign companies accounted for the majority of the trades (76%), followed by local companies (14%).
In terms of market turnover (monetary terms), the market recorded an increase from Shs26.6bn in the first four months of 2018 to Shs28.3bn in the same period of 2019.
Four counters recorded the highest turnover – Umeme with Shs 15.1bn, Stanbic (Shs8.6bn), Baroda (Shs3.4bn) and dfcu (Shs3.4bn).
However, the remaining counters recorded turnover of less than a billion shillings each in the same period under review.
Overall, in the first four months of 2019 alone, Umeme, Baroda and stanbic accounted for over 96% of total turnover. The number of trades or deals totaled 1, 634.
Paul Bwiso, the Chief Executive Officer at the USE told The Independent that they have embarked on a new initiative where each of the listed companies will be invited for a special event to ring the bell and speak about company performance and that of the market in general.
This initiative, he said, is aimed at keeping the bourse in the ears of the public. The first beneficiary of this imitative was Umeme Limited. The company’s Board Chairman and businessman, Patrick Bitature rang the bell on May 16.
Bitature said Umeme plans to invest $200million per year in the next five years. He, however, said it would be good for the company to raise this money locally instead of going for external sources that usually come with foreign currency challenges.
“We need to encourage more companies to list…and raise money cheaper than borrowing in foreign currencies,” he said.
He said Uganda’s USE and other actors need to do more in the area of financial literacy to encourage more people to trade on the USE.
“We all have a role to play,” he said. He added that Umeme’s share price, currently at around Shs300, will shift when the concession is sealed as more people start to buy into the company more aggressively.
Bwiso said the market needs more ambassadors, influencers. He added that students, investors, stock brokers are playing a big role in marketing the bourse.
One challenge that the market faces, Bwiso said, is that shares are not readily available because institutional investors, who hold majority shares on the market, do it for the long term – they do not sell them.
However, he said that, by encouraging new companies to list, the market would thrive. For instance, he said, when Cipla listed last year, 2,583 new investors came onboard and that the company was able to raise Shs16bn.
In addition, Bwiso said they have set up training classes for the general public to learn about the activities of the stock market and be able to take part in trading. The Nakawa-based bourse trades 17 local and regional companies specialising in different sectors.
Issuer trading deals for first four months of 2018 and 2019
|Issue name||2018 deals||2019 deals|