DSE trading slows as investors adopt wait-and-see stance ahead of polls

This marks the second consecutive week of decline, following a 21.66 percent drop in the week ending October 17, when trading value fell from Sh15.66 billion to Sh12.27 billion.

The slowdown coincides with a decrease in foreign investor participation during the third quarter of 2025, as global yields rose and the US Federal Reserve maintained elevated interest rates. 

Figures show that offshore investors increased their stock sales by 41.9 percent, selling shares worth Sh114.9 billion between July and September, compared to Sh80.9 billion in the second quarter.

DSE chief executive officer Peter Nalitolela was recently quoted as saying the increase in foreign sell-offs reflected portfolio rebalancing and broader global dynamics rather than declining confidence in Tanzania’s market.

“It reflects a combination of domestic market dynamics, macroeconomic adjustments, and global yield movements, rather than a loss of confidence in the Tanzanian market,” he said.

Investor caution ahead of polls

Market analysts say investor caution is typical during politically sensitive periods. Zan Securities Limited CEO Raphael Masumbuko noted that the current slowdown may be linked to election-related uncertainty.

“Things are not that bad, but investors may feel that with attention shifting towards elections, demand could dip and prices might fall.

That’s what could be happening now,” he said. However, he expressed optimism that trading activity would rebound after the polls.

“Investors remain hopeful that once the election period ends, things will return to normal,” he added.

Analysts also believe that the ongoing release of financial statements by listed companies could help revive sentiment and stimulate market activity in the coming weeks.

Financial market expert Isaac Lubeja said the market is entering the third-quarter earnings season, a period typically marked by mild volatility.

“Anticipation surrounding these results is already influencing investor sentiment, fuelling optimism that has lifted several counters in recent sessions,” he said. “Nonetheless, trading volumes are expected to remain relatively subdued until the results are released and institutional investors can deploy larger capital flows.”

He added that the Industrial and Allied and Commercial Services segments are expected to maintain their upward momentum, supported by renewed investor interest in firms demonstrating strong earnings resilience.

Banking stocks, which recorded sharp gains earlier in the year, may consolidate as investors rebalance their portfolios ahead of the results season.

“Overall, the equity market retains a constructive tone, with expectations of further price appreciation in the coming weeks underpinned by improving liquidity conditions,” he said.

Fixed-income market

In the bond market, yields have continued to decline across the curve, extending the downward trend seen in recent auctions. The long end of the curve is hovering near 13 percent, while short-dated papers have compressed further to around 11.5–12 percent.

The narrowing spread reflects a flattening yield curve, driven by strong demand for 10-year and 15-year Treasury bonds, both of which were heavily oversubscribed.

Turnover and trading patterns

Solomon Stockbrokers Ltd Chief Investment Officer Patrick James said equities turnover during the two weeks ending October 24 closed at Sh36.68 billion, a 12.28 percent drop from Sh41.82 billion recorded in the previous two weeks ending October 3.

“The drop was caused by an 11.09 percent decline in block trades, from Sh20.02 billion to Sh17.80 billion, while normal counter trades fell by 13.36 percent, from Sh21.80 billion to Sh18.88 billion,” he said.

Mr James said the decline was likely part of short-term fluctuations rather than a reflection of weaker investor appetite, noting that the number of trades actually increased by 1.41 percent.

He added that fixed-income transactions in the secondary market surged to Sh705 billion during the two weeks ending October 24, a 225.27 percent increase from Sh216.89 billion recorded in the previous period, despite falling yields.

“This may indicate that investors are prioritising safer assets that guarantee steady returns, compared to the relatively riskier equities market, as we head towards the general election,” he said.

Independent analyst Christopher Makombe said the decline in DSE activity was likely driven by election-related uncertainty, causing reduced foreign participation and cautious trading behaviour.

“With the general election approaching, investors appear to be in wait-and-see mode. Lower volumes and turnover suggest that many participants are staying on the sidelines,” he said.

“Market activity is likely to increase once the election concludes and government operations normalise under newly elected leadership.”