Brokers in their shinny red coats have been watching the boards at the exchange and closing some trading sessions without making any deal. These gloomy days at the USE have been attributed to the global economic downturn that has largely affected foreign investors who have opted out of the market.
The local economic haggles cannot be ignored on the other hand, as inflation now at an estimated 28% bites, a depreciating shilling and limited confidence in the listed companies on the exchange. Only last year, the Ugandan bourse was boasting as one of the best performing in Africa with more than 50% growth in shares traded.
Turnover in 2010 was up by 51.6% to Ushs27.6b ($328m) compared to a similar period in 2009, when turnover stood at Ushs18.2b ($217m). This performance is not likely to happen again this year as the all share index has already plummeted from a high of 1,204 in January to around 853 by the end of September 2011.
Between May and September 2011, there has been a sharp decline of about 19.3% which has wiped billions of investments on the stock exchange. Compared to the same period last year the bourse was in a buoyant state as it was recovering from the slump of 2009.
Analysts point out that the exchange is likely to decline in performance by the end of the year and return to levels of 2009.
The Nairobi Stock Exchange (NSE) has also been performing poorly with data from the markets' showing a decline of about 22% since January 2011.
In August the NSE was ranked as the worst performing stock exchange in the top 16 equity markets in Africa. Investor confidence on East Africa's largest exchange is at a low which is clearly shown in the performance of the bourse since January.
Kenya is also facing inflationary challenges (17.3%), a depreciating shilling and the limited performance from foreign investors who seem to have pulled out of the market. Inflation tends to hurt retail investors as they are largely affected by any change in their disposable income
This was clearly seen in the less than impressive performance of the Britak IPO in which foreign investors subscribed shares worth only 1%. The performance of the IPO was at mild 60% and once the Britak was listed on the NSE, its share price dropped by 33% in its first week of trading.
Foreign investors had begun their return to the NSE last year when their turnover alone was Kshs.42b ($500m) representing an 80% rise from the 2009 levels. The market capitalisation at the NSE as of 2010 statistics is Kshs1 .2trillion ($14.3m). Investors on both the USE and NSE are holding back on their shares as prices of most stocks are still low and are not willing to sell at a lower price.
The markets are also limited on demand as less investors want to buy shares at the current prices. Although analysts have said that the market dynamics are that this is the best time to buy, there is the anticipation by some investors that the prices could go even lower.
In Uganda and Kenya, investors are seeking to place their money in tangible assets like property and land since it's anticipated that this is a safe haven. The equity markets are now being considered as risky and murky until they begin to rebound.
There is no quick fix to the current jitters on both the NSE and USE though there is the belief that the markets will recover. In Uganda liquidity on the bourse has always been a challenge and Kenya is not synonymous to low investor confidence.
"Once the economies in the region begin to rebound, and then we should see the return of some retail investors to the equity markets," Say Kenneth Kitariko the CEO of African Alliance Uganda.
He adds that once the global economy also begins to shake off the challenges in the Eurozone, then trading activity will also begin to pick up.
The current prices of some shares are still at a low which encourages buyers once there is stability in the economies as this creates demand. As long as demand returns then market recovery is expected.
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