Moremi Marwa unpacks the DSE 3rd quarter performance

The Dar Es Salaam Stock Exchange (DSE) experienced a mixed performance in the third quarter of 2021, with outstanding listed bonds showing an increase compared to the previous quarter, while indices and equity market capitalization recorded a decline. Moremi Marwa, the CEO of the DSE, shared insights on the market performance and the factors influencing it. Despite facing challenges, Marwa highlighted some positive aspects of the market's performance, particularly in terms of liquidity. However, market capitalization saw a decrease of about 1.6% in the quarter. This decline was attributed to the depressed earnings of some companies listed on the exchange. Companies from sectors such as insurance, telecommunications, and microfinance reported earnings below expectations, impacting dividend expectations, valuations, and returns. The COVID-19 pandemic played a significant role in affecting company earnings, with businesses facing challenges such as delayed audits and renegotiated contract obligations. Foreign investment also declined due to the pandemic, further impacting market performance. The DSE itself, as a listed entity, saw its stock price fall by 8%, reflecting decreased foreign demand. Marwa emphasized the importance of mobilizing domestic resources and attracting more local investors to the market. Initiatives such as a mobile trading platform aim to increase retail investor participation, while engaging institutional investors like pension funds and insurance companies can enhance liquidity and stability in the market. Despite challenges, Marwa highlighted the relative attractiveness of DSE-listed securities compared to other asset classes. The market boasts good valuations, with a market-to-earnings ratio of 11 times and a dividend yield of 5%. The overall returns from market capitalization and dividends have been positive, offering investors returns of around 18% in Tanzanian shillings and 10-11% in US dollars. In terms of the bond market, the DSE is primarily dominated by treasury bonds, comprising 99% of listed bonds. Marwa discussed plans to diversify the bond market by attracting municipal bonds, green bonds, and corporate bonds. Efforts are being made to collaborate with government ministries and international organizations to facilitate the issuance of municipal bonds and support sustainable finance initiatives. These initiatives aim to expand the offerings in the bond market and provide investors with a broader range of investment opportunities.