Positive Mood Spurs Uganda Trading

Bullish investor sentiments have had an overall positive impact on trading at the Uganda Securities Exchange (USE).

Quarter 1 statistics released by the bourse last week show that during the period January 2014 to March 2014, the total turnover registered at the bourse was Ush16.9billion.

Of the total turnover, 49.91% arose from the UMEME counter Stanbic Bank Uganda, DFCU Bank, British American Tobacco Uganda and Bank of Baroda Uganda counters each contributed 22.45%, 12.95%, 11.04% and 2.89% respectively of the total turnover during the period.

There were 1276 deals recorded during the period with Stanbic Bank dwarfing all the other counters having registered the largest number of deals (565 in total) or 44.3% of the deals. Umeme had 435 deals (34%), UCL 61, DFCU Bank 55, Bank of Baroda 64, BATU 34, NIC 34, NVL 34 while CENT recorded 4 deals.

The All Share Index opened at 1522.46 at the beginning of the quarter, hitting a high of 1571.16 in mid-January before experiencing a slump that saw it hit lows of 1420.16 in early February. It then rose steadily in the remainder of the quarter to 1481.93, 1490 and closing at 1503 on March 31, an overall decline of 1.28% during the period.

The Local Share Index on the other hand was firm perhaps reflecting bullish investor sentiments opening at 239.48 rising to 261.31 through 267.88 at the turn of February and closing at 270.79 on March 31, an overall growth of 13.1% during the period.

According to Arthur Nsiko a Securities Analyst at African Alliance Uganda, the quarter’s performance shows that investor interest has increased at the bourse.

“There’s a year when the total turnover was only Ush32b. So Ush16b in just one quarter is really commendable. Umeme had a lot of foreign interest and these are usually large corporations who make trade in large volumes,” he said.

He added, “Going forward we expect the usual stocks Stanbic Bank and Umeme to continue performing well because of their good financials.”

Umeme’s FY13 financial results released recently show that Earnings Per Share went up 47% to Ush51.54. A final dividend of Ush16.8 was declared. This Together with an interim Dividend Per Share of Ush8.00 gives investors a total dividend of Ush24.8. Gross profit increased by 30% to Ush290b the growth estimate of 26% predicted by some analysts. As a result profit before tax went up 89% to Ush115bn. During the year, Umeme concluded a debt financing package of $190m composed of term loans of $170m and working capital facilities of $20m.

The power firm has however not had a smooth ride in recent months having received a lot of deride from power consumers who blame Umeme for failing in its mandate.

A report by a parliamentary committee set up to investigate the country’s energy sector and adopted by lawmakers recommended that government cancels Umeme’s 25-year concession to distribute power in Uganda.

The report accused Umeme of exaggerating its investments and failing in parts of its mandate.

Umeme however insists that the objectives of the concession, which included improved service delivery of electricity to customers, refurbishment of a dilapidated network as well as the creation of a ger more attractive distribution function, have been achieved

Arthur Nsiko is confident that Umeme will continue to perform well despite the negative sentiments.

“Umeme is a good counter and has a lot of foreign interest. So we don’t expect any effect on that counter in the short term.”

Last week, the bourse closed with the All Share Index at 1493.23 down by 65.14 basis points while the Local Share Index closed at 270.90 staying flat at the same value that opened the week.

Three stocks aanced while six declined an aance to decline ratio of 3:6.

The most active counters by volume were Stanbic Bank Uganda, UMEME Limited, National Insurance Corporation, Uganda Clays Limited, DFCU Bank and BAT Uganda DFCU, CENT and Equity Bank Limited aanced. The decliners included East African Breweries Limited, Nation Media Group, Kenya Airways and Jubilee Holdings Limited.

The turnover during the week was at Ush655.7m greater than the Ush370.3m recorded the previous week. The number of shares traded stood at 1,415,694 less than 3,000,263 that were traded the previous week.

Source : East African Business Week

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