Tanzania financial market review

Tanzania's financial market recently experienced a significant surge with a 338.18 per cent increase in weekly turnover, reaching TZS 9.57 billion. The 25-year Treasury bond also traded at 113.92 per cent, showcasing notable growth and activity in the market. To delve deeper into these market dynamics, Ramadhan Kagwandi, the Chief Executive Officer of Exodus Advisory, sat down with CNBC Africa's Tabitha Muthoni to provide valuable insights. The spike in turnover, primarily driven by brokerage trades, indicates renewed institutional interest in the market. This interest could be attributed to portfolio rebalancing, fiscal year positioning, and earning expectations in sectors such as banking and consumer goods. While some speculative activities may be present, the size and concentration of trades suggest strategic positioning rather than short-term speculations. The banking sector index experienced a 2.1 per cent growth, propelled by the performance of banks like CRDB and NMB. Factors such as higher interest margins from loan repricing and strong investment in Treasury Bills and Bonds have contributed to the profitability of these banks. Additionally, Tier 1 banks are focusing on enhancing their capital adequacy to comply with Basel III regulations, indicating a strategic strengthening of their balance sheets. As retail investors become more active in the market, their participation signals a boost in investor confidence. While some sell-offs by listed companies have affected the DSE, domestic stock valuations remain stable. There is potential for price-to-earnings multiples expansion in the banking and investment sectors if earnings continue to be resilient. Capital market regulators like the Capital Markets and Securities Authority (CMSA) and the Dar es Salaam Stock Exchange (DSE) are actively working on reforms to enhance market depth. Initiatives such as digitizing investor onboarding and promoting pension fund diversification are expected to further drive market growth. However, delays in listings, particularly with Small and Medium Enterprises (SMEs) and uncertainties around mergers and acquisitions, could temporarily slow down equity momentum. Despite these challenges, the overall market momentum remains positive, pointing towards continued growth and opportunities for investors.