Trading at securities exchange eases off

March 15, 2018 in Investment, Markets by Editor

March 15, 2018—Total market turnover at the Uganda Securities Exchange (USE) during February declined 24.8% to UGX 6.24 billion (about $1.7 million) from UGX 8.37 billion ($2.3 million) in January. Volumes traded during the month were 87.9% shy of the 175.05 million shares traded in January falling to 21.27 million.

February closed with the USE All Share Index shedding 0.85% of its value while the Local Share Index and the C8, posted a marginal 0.56% gain after four of the local counters appreciated in price.

However, yields from government securities gained momentum amid stable investor demand. In February, the short-term government securities gained by an average of 11.73 basis points (bps) across all tenors most of which were on short term notes.

The 182D took the lead rising 33.50 bps to 8.4%, the 364D rose 30.90 bps to 9.3% while the 91D advanced by 19.10 bps to 8.4%. Medium term notes were relatively mixed after only the 2Y bond gained 4 bps to 10.96%, the 3Y remained unchanged at 11.2% while the 5Y shed 17.5 bps to 12.3%. On the longer horizon, the 15Y had the biggest gain of 20.80 bps to 14.4% while the 10Y increased 3 bps 13.98%. Over a one-year period, yield declines on all tenors have narrowed to 24.2% relative to 27.8% in January

Bank of Uganda reduced the Central bank rate (CBR) by 50 basis points to 9% expressing a cautionary stance on the trajectory of economy. BoU expects the economy to pick up to a projected range of 5 to 5.5% in the current financial year and average 6.3% over the next 5 years. The bank indicated that business activity in the country improved with Foreign Direct Investments (FDI) growing 18.5% and credit extension by 10.8% in December 2017.

Annual Core Inflation shed 0.9 percentage points to 1.7% leading to the reduction of Annual headline inflation to a low of 2.1% from 3% in January. The consumer price index report (CPI) by the Uganda Bureau of Statistics indicates the continued decline in prices of goods classified as other goods which include Sugar, bread and cereals as the major contributor to the low core inflation. Annual food Crops inflation dropped to below zero at 0.7% from 1.4% in January, Annual Energy, Fuels and Utilities (EFU) however increased to 11.2% following a 7.3% rise in liquid energy fuels, 20.4% increase in solid fuels.

The Uganda shilling shed 0.58% of its value with mounting pressure in the last week of February. The local currency had been stable throughout the month averaging UGX 3,628 but broke out to a low of UGX 3,653. On a year to date basis, the shilling lost 0.16% of its value against the dollar, 1.85% against the Kenya shilling while it remained stable against the Tanzania Shilling.