Coronavirus wipes Sh2 trillion off DSE

Dar es Salaam. The massive impact of Covid-19 on the Nairobi Securities Exchange (NSE) has been strongly felt at the Dar es Salaam bourse, sending the latter’s market capitalisation down by Sh2 trillion within a month, market data shows.

Stocks listed on the NSE have lost Ksh573 billion (about Sh12.6 trillion) of their value over the past two months as the spread of the coronavirus and other economic headwinds spark an exit of foreign investors.

With some of NSE stocks cross-listed at the DSE, the impact did not end only in Nairobi, with latest data showing that Tanzania’s only stock market also lost nearly Sh2 trillion in a period of one month ending March 18.

Covid-19 is compromising global investors’ sentiments and decisions while many were also making exits.

DSE’s reports show that the market capitalisation dropped by nearly 13 percent to Sh15.7 trillion as at Wednesday this week, from Sh17.1 trillion recorded on February 18 this year.

The slowdown of the market capitalisation was due to decrease of share prices for nearly all cross-listed and a few locally-listed companies.

The companies which experienced the shrink of market capitalisation due to fall of share prices include: East African Breweries Limited (EABL), Jubilee Holdings Limited, Kenya Airways, KCB Bank and Nation Media Group (NMG), CRDB Bank, DSE Plc and Swissport.

Analysts project continuing slowdown of equity markets activities due to challenging business and economic situation, as investors are now rushing to safe heavens including gold and government debt instruments.

DSE chief executive officer Moremi Marwa confirmed to The Citizen over the challenges facing the stocks market, saying it was a global concern, as almost each and every country was facing a similar situation.

However, Mr Marwa did not give his predictions for future, but he said this will depend on investor mindset and sentiments, as well as government policies.

Explaining on the reviewed market trends, Mr Marwa said the market has over the last two weeks been experiencing slowed trading activities, citing the absence of foreign investors.

He said the Tanzania’s equities market was currently dominated by foreign investors who account for up to 85 per cent of the activities.

However, he said the ongoing Covid-19 crisis; nearly all foreign investors have decided to hold their activities, resulting in a significant drop of share movements.

For cross-listed companies, Mr Marwa said some of investors have been exiting through the NSE by selling their shares on discounted prices and they usually secure buyers.

He said it was easy to exit at NSE because of high liquidity at the market compared to the DSE.

EABL contributed to the highest market capitalisation drop, shrinking by Sh800 billion, after the share price decreased to Sh3,860 on Wednesday this week from Sh4,880 recorded on February 18 close.

The decrease lowered market capitalisation of the company, which was the largest at DSE to Sh3.05 trillion on March 18, from Sh3.85 trillion recorded on February 18. This drop saw Tanzania Breweries Limited (TBL), leapfrogging EABL to become the company with the highest market capitalisation at the DSE. Its (TBL’s) market capitalisation stands at Sh3.2 trillion.

The second loss was reported on KBC Bank counter after its market capitalisation went down by Sh650 billion, following the decrease of share price to Sh920 from Sh1,140 one month ago.

Earlier, KCB Bank was the second largest behind EABL, but was pushed to third largest, after its market caps dropped to Sh2.73 trillion from Sh3.38 trillion respectively.

The report shows that during the period of one month NMG market cap slowed by nearly Sh40 billion due to decrease of share price, KA dropped by Sh114 billion while JHL shrunk by Sh100 billion.

NSE chief executive Geoffrey Odundo last week said the low prices offer an attractive entry point for investors, whether they are chasing dividends or capital gains.

“Discounted stock prices of leading Kenyan companies listed on the NSE offer an attractive entry point to the stock market for both domestic and international investors looking for enhanced returns on their investment,” Mr Odundo was quoted by Business Daily as saying.

He added: “The fundamentals of the listed companies continue to be strong supported by an enabling microeconomic and political environment.”

According to DSE reports, CRDB Bank Plc’s market capitalisation dropped by Sh100 billion, or nearly 25 per cent of its value in one month.

Swissport dropped by nearly Sh6 billion while DSE Plc dived by Sh1.2 billion.

Tanzania Portland Cement Company Limited (TPCC) emerged as the gainer, with its market cap jumping by Sh40 billion due to an increase of share price to Sh2,200 from Sh2,000. The director of operations at the Orbit Securities Company Limited Mr Juventus Simon said share buyers and sellers always recognize their priorities for trading and always conduct due diligence before invest.

He said, “Like any equity market in the world we have been affected by the pandemic, but we expect that in a short period of time the market will adjust and return to normal”.

The chief executive officer of brokerage firm Zan Securities, Mr Raphael Masumbuko, said the pandemic impact can be seen by the exit of the majority foreign investors.

However, he noted local investors still shows an active participation.

“Impact to locals is still low as they continue to actively participate in the trading activities, and we are optimistic that in a short while the market would record improvement,” he said.

Stocks listed on the Nairobi Securities Exchange (NSE) have lost Sh573 billion of their value over the past two months as the spread of the coronavirus and other economic headwinds spark an exit of foreign investors.