Inside Tanzania’s market movements

The Dar es Salaam Stock Exchange has seen a surge in local investor participation, while corporate bond trading has seen a slowdown in recent times. Fortius Rutabingwa, the Executive Director of Research & Innovation at Orbit Securities, shed light on the factors driving this trend and its sustainability in the medium and long term. The rise in local investor participation can be attributed to various factors, including increased financial education among the public and the convenience brought in by the mobile trading platform introduced by the exchange. The recent introduction of multiple collective investment schemes has also fueled this growth, providing a new avenue for capital formation and investments in the stock market. Rutabingwa emphasized that the continued inflow of capital from these schemes and local institutional investors like pension funds and insurance companies is expected to boost local participation in the stock market. This bodes well for the overall health of the market, signaling a positive outlook for the Tanzanian equity market in the foreseeable future. Despite the recent depreciation of the Tanzanian shilling against the US dollar and the Rwandan franc, Rutabingwa remains optimistic about the impact on the domestic economy and foreign investor sentiment. While the currency volatility may unsettle some investors, interventions by the central bank to stabilize the exchange rate are in place to mitigate any adverse effects. Moving forward, investors are advised to monitor certain stocks in the coming days to stay abreast of market dynamics. In terms of government securities, the treasury bond market remains robust due to its size, providing ample liquidity for investors. However, the corporate bond market still lags behind in terms of size and liquidity, with more issuers needed to stimulate secondary market activity. Overall, the market experts suggest a cautious approach for investors amid the evolving market landscape, with a focus on diversification and prudent decision-making to navigate market fluctuations effectively.