DAR ES SALAAM: THE stock market paused last week after a sustained rally, with benchmark indices retreating modestly as investors locked in profits and shifted focus to the next corporate earnings season.
The Dar es Salaam Stock Exchange (DSE) All Share Index fell 0.83 per cent during the week, while the Tanzania Share Index declined 0.88 per cent, a movement, analysts, described as a natural correction rather than a sign of weakening market fundamentals.
Zan Securities Advisory and Research Manager Isaac Lubeja said yesterday through Weekly Market Wrap Up that the slight declines in both indices reflect a healthy breather as investors digest recent gains.
“We expect large-cap banking counters to experience minor price corrections and trade within a relatively narrow range over the coming weeks as profit-taking runs its course ahead of the next corporate earnings cycle,” Mr Lubeja said.
The market slowdown coincided with a sharp shift in liquidity following the successful sale of the 20-year Treasury Bond, which attracted 381.06bn/- from investors. The sizeable bond auction diverted funds away from the secondary debt market, where weekly turnover dropped 39.28 per cent to 92.62bn/-.
Mr Lubeja said the decline in secondary market activity was largely temporary and reflected investors’ participation in the primary bond market.
“The strong Treasury bond auction temporarily absorbed liquidity from the financial system.
“As settlement pressures ease, we expect trading in the secondary fixed-income market to gradually recover, with portfolio managers reallocating capital towards attractive long-term securities,” he said. Despite the softer performance in the benchmark indices, domestic investors continued to provide support for the equity market amid increased foreign selling.
Net foreign outflows rose sharply to 137.58bn/-, although local institutional investors and pension funds absorbed much of the selling through pre-arranged trades, limiting the impact on overall market capitalisation.
“A key issue to watch in the coming weeks is the management of foreign capital outflows,” Mr Lubeja said. “Domestic institutional investors have continued to provide an important buffer, and their participation should help keep the market stable even if external pressures persist.”
He added that while trading activity remains concentrated in banking heavyweights such as CRDB and NMB, investors are increasingly looking beyond the largest listed companies.
“Some small- and mid-cap stocks have started generating independent momentum,” he said. As larger financial counters stabilise, Zan Securities expect retail investors and smaller institutions to rotate part of their portfolios into the system.