Investors snap up Vodacom shares despite price fall
What you need to know:
- At the end of the trading session, the foreign investors pushed the liquidity up to Sh3.74 billion in total from 7,490,370 total shares
Dar es Salaam. Foreign investors stimulated activity at the Dar es Salaam Stock Exchange (DSE) on Tuesday after injecting over Sh2.9 billion at Vodacom Tanzania counter through a block trading arrangement.
At the end of the trading session, the foreign investors pushed the liquidity up to Sh3.74 billion in total from 7,490,370 total shares, according to the bourse’s market report for June 29, 2021.
For Vodacom, this is the first big transaction at the local bourse since the company announced a Sh30 billion annual loss last month.
By considering the turnover and volume of 7,257,562 shares traded in the block trade, Vodacom traded each share at an estimated negotiation price of Sh400, lower than its market price of Sh770.
Speaking to The Citizen financial analysts say the transaction does not reflect on the fall of demand for the company’s stocks, but rather shows that other investors are optimistic on the future outcome.
“The transaction can be influenced by many factors, as other investors do not necessarily rely on dividend but a long term investment,” director of Arch Financial and Investment Advisory Limited, Mr Mazengo Kasilati said.
Mr Kasilati says, for a buyer to purchase stocks of a certain company he/she too must have all the market information, so by buying Vodacom shares he/she may have good hopes that in the future the company’s performance would recover.
His perceptions were also aligned with a stock dealer, Mr Juventus Simon, who said a single year loss would not affect investors’ sentiments especially if that company has shown potential to recover.
“A near Sh3 billion transaction is just a normal size transaction for a company like Vodacom which still holds one of the largest market cap size, and it has also showed promising traits after it told its shareholders about the future cost cutting plans,” he said. Mr Simon serves as the director of operation at Orbit Securities Company Limited.
Second big transaction made by foreign investors was at the Tanzania Portland Cement Company Ltd. (TPCC) - ‘Twiga Cement’ - swhich traded 186,432 shares in a pre-arranged market board.
Twiga Cement recorded a total turnover of Sh839.3 million at the end of the trading session on Tuesday.
