Uganda Stock Exchange market registers 85% drop

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Low volumes were traded at the Uganda Securities exchange, turnover for the month of August dropped to Ugx. 2.4 billion ($0.7Mn) from Ugx16.2Bn ($4.8Mn) in July. A 85.2 percentage drop.

The lower turnover was due to price mismatches on most counters. Furthermore, some investors were clearly waiting for the release of half year financial results.

The market had 16.3 million shares changing hands in August down from 200.5 million shares previously.

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Generally, there were more bids than offers on the market.

Seven out of eight local counters posted activity in August with Umeme contributing 89.58 percent of the month’s turnover with Ugx. 2.2 billion ($639,427).

Stanbic Bank Uganda traded Ugx207.2Mn ($61,477) while BOBU recorded Ugx17.4Mn ($5,153). It is worth noting that August marks the third straight month in which BATU counter has not traded.

The UMEME share price gained 4.57 percent to Ugx. 526 from Ugx. 503 at the beginning of the month. On the other hand; Uganda Clays Limited, National Insurance Corporation, Stanbic Bank Uganda and Bank Of Baroda Uganda share prices shed 13.33 percent, 8.33 percent, 3.7 percent and 0.72 percent each to Ugx.13, Ugx.11, Ugx. 26 and Ugx. 137 respectively.

Government Securities Market, Turnover surges as yields fall

Bond market turnover more than doubled to Ugx. 444.8 billion ($131.9Mn) last month from Ugx. 144.9Bn ($43Mn) in July 2016.

Bank of Uganda raised Ugx. 694.1Bn ($205.9Mn) in the three Treasury bills and one Treasury bond auction held in August.

The two year note yield at weighted average price rose by 78 basis points to 16.638 percent. Rates across all other tenors fell in August with the 1-year tenor recording the biggest reduction of 107 basis points to 16.407 percent owing to increased demand for short term investments.

Markets also reacted towards the continued ease of monetary policy by the Central Bank with investors focusing on short and medium term notes.

Economic Update

Lower Inflation and Largely Stable Shilling: Annual Headline Inflation for the year to August 2016 fell further to 4.8 percent from 5.1 recorded during the year ended July 2016.

The Uganda Bureau of Statistics (UBOS) attributed the decline to reduced Annual Core Inflation which fell to 4.9 percent in the 12 months to August 2016 from 5.4 percent previously.

The slowdown in Annual Core Inflation was as a result of a drop in other goods inflation and Annual Services Inflation.

The Uganda Shilling shed some of its gains at the beginning of the month due to increased dollar demand from fuel importers and commercial banks covering their short positions.

It was quoted at 3,387 on 2nd August 2016. However, the local currency later posted gains supported by subdued corporate demand for hard currency and liquidity controls by the central bank through repos coupled with foreign exchange inflows from offshore investor demand for local debt.

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