The equity market may experience a slight sell-off in the coming weeks.

According to the weekly market wrap up’s outlook by Zan Securities Limited, Banking Finance and Investment Index (BI) recently declined by 0.03 percent week-on-week, reflecting a knee-jerk reaction to the recently released financials. 

However, domestic equities remain resilient, with the Tanzania Share Index (TSI) delivering a 7.88 percent return year-to-date. Despite this overall strength, we might see some price pullbacks in counters like NICOL and TOL. 

NICOL’s modest 4.8 percent year-on-year increase in net income has left investors skeptical about the potential for impressive full-year results, while TOL’s decision to forego dividend payments and instead use retained earnings to fund ongoing investment projects may also impact its share price.

“As we approach the end of the third quarter, the focus will shift to Q3 earnings reports, expected to be released in the last week of October,” the report says.

“These reports will provide crucial insights into corporate performance and are likely to have a significant impact on market sentiment. Companies in the banking and investment sectors, which have performed well throughout the year, are expected to report strong results, potentially boosting investor confidence.”

During the trading week ending on September 06th, the Dar es Salaam Stock Exchange (DSE) saw a decrease in turnover compared to the prior week. The total market turnover decreased to 685.79m/- million, reflecting a 2.18 percent downtick from the previous week's 701.06m/-.

There were no activities in the pre-arranged board for the week.

Throughout the week, CRDB dominated trading activities, representing 70.75 percent of the total market turnover, followed by NMB at 17.88 percent and NICO at 3.43 percent.

MBP gained 9.68 percent closing off the week at 340/- per share. 

However, NICO lost 2.56 percent reaching 760/- per share and DSE share price decreased by 1.64 percent concluding the week at  2400/- per share.

In terms of market capitalization, there was a general increase in the size of the markets, with total market capitalization increasing by 0.74 percent to 17,678.69bn/- by the week's end. 

However, domestic market capitalization decreased by 0.01percent, reaching 12,299.4bn/-.

 The report also shows the debt market is likely to face challenges due to tightening liquidity and rising yields. 

The recent oversubscription in the 25-Year Treasury bond auction indicates that investors are seeking to lock in higher coupon rates. 

However, as investors begin to shift their focus towards equities, demand for fixed-income securities may decline, putting additional pressure on bond prices and driving yields higher.

On Wednesday 4th September 2024, the Central Bank was in the market offering 206.170bn/- to investors for the re-opening of the 25-Year Treasury bond offering a 15.95 percent coupon rate annually. 

The auction was subscribed by 217.82 percent - the auction received bids totaling 449.072bn/- billion and accepted bids worth 335.087b/-.

This is the first re opened 25-year Treasury bond in 2024/25 after the issuance of the new calendar for the first half of the fiscal year 2024/25. 

With the amount offered by BOT being 206.170bn/-, the minimum price in this auction has decreased from 105.55 in the previous auction held in June 2024 to 101.4999 and the weighted average yield has seen an increase by 3.72 basis points from 15.3816 percent in June to 15.4188 percent in this auction. 

The high subscription rates continue to reflect higher demand for the longer term maturities due to the higher coupon of 15.95 percent and increased yields. 

During the week ending on September 06th, market activities saw a decrease compared to the previous week. Overall turnover decreased by 50.93 percent, from 23.2904bn/- to 11.4296bn/-. 

However, there was a slight increase in the number of trades, rising from 64 to 65.

Trading activities primarily focused on the long end of the yield curve, with the 20-year and 25-year bonds traded contributing to 95.46 percent of the total turnover.

In the corporate bond segment, there was an increase in activity compared to the previous week. KCB corporate bond KCB-2022/25.