Keith Kalyegira (C), the CMA CEO addressing the press
The Uganda Securities Exchange (USE) total market capitalization fell by 15.7% to Shs19.09 trillion at the end of 2019/20 from Shs22.66 trillion at the close of 2018/19, the Capital Markets Industry Report 2019/20 has revealed.
There are 17 companies listed on the USE; nine of the companies are locally listed while eight of them are cross listed from the Nairobi Securities Exchange.
Launching the inaugural report on Tuesday at Golf Course Hotel in Kampala, Keith Kalyegira, the Chief Executive Officer at Capital Markets Authority (CMA) attributed the drop to the decrease in the share prices of all cross-listed counters; Nation Media Group, Equity Bank, KCB, Centum, Jubilee Holdings, Kenya Airways, East African Breweries Ltd and Uchumi Supermarkets Ltd; and all other locally listed counters with exception of British American Tobacco Ltd whose share price remained unchanged.
According to the report, domestic market capitalization that represents the value of locally listed counters closed lower at Shs4.27 trillion, representing a drop of 13.1%, from Shs4.91 trillion at the end of 2018/19.
This was mainly due to share prices losses registered on local listed counters; Uganda Clays Ltd (-14.6%), Cipla Quality Chemical Industries Ltd (-37.5%), National Insurance Company (-30.8%), Umeme (-18.3%), Stanbic Bank Uganda (-17.2%), Bank of Baroda Uganda (-14.6%), New Vision Ltd (-4.6%) and dfcu (-3.7%).
“The fall in share prices can be attributed to among other things, sell-offs by offshore investors due to the strengthening of the USD before the COVID-19 pandemic,” the report says.
The report adds that domestic market capitalization, when measured as a percentage of GDP, fell from 4% at the end of the financial year 2018/19 to 3.4% at the close of the financial year 2019/20.
“This is in part because the Ugandan economy grew faster than the domestic market capitalization,” the report reads in part.
In comparison with other jurisdictions, Uganda’s domestic market capitalization to GDP ratio is still low.
At the end of the FY 2019/20, the report says, domestic market capitalization to GDP ratio of Kenya, Zambia and Nigeria stood at 20.6%, 13.4% and 7.4% respectively.
Market Turnover
“Equity turnover at the USE grew by 146.1% in the Financial Year 2019/20 to Shs115.4bn, from Shs46.9bn registered in the previous Financial Year,” Kalyegira said, adding: “Average turnover by session increased to Shs456.3m per session in 2019/20, from Shs189.7m recorded in 2018/19.”
Kalyegira added that the increase in value traded was driven by improved activity on dfcu bank, Umeme and Stanbic Bank counters in the period before COVID-19 pandemic.
According to the report, at the end of the FY 2019/20, Uganda’s equity turnover ratio stood at 0.6%.
“In comparison with other jurisdictions, there is still room for growth. At the end of FY 2019/20, Kenya’s equity turnover stood at 8% while Nigeria’s stood at 7%,” Kalyegira said.
According to the report, over the last five years, the total equity turnover at the USE has decreased by 9.3%on an annualized basis from Shs188.2bn in the FY 2015/16 to Shs155.8bn in the review period.
