Crested Capital stock dealers trading at the Uganda Securities Exchange in Kampala. PHOTO | MORGAN MBABAZI Following the end of the offshore investor season, average trading turnover at the USE dropped to less than Ush20 million ($5,493) per day at the beginning of October while trading volumes fell to less than 200,000 shares per day.
Most investors are driven by the desire for routine dividend payments and in return, trade activity associated with offshore players offers huge revenue streams for exchange, stockbrokers, dealers and Capital Markets Authority through commissions on shares trades.
Signs of lower trading momentum by offshore investors was noticeable in stockbrokers’ order books amidst widespread effects of the Covid-19 pandemic.
Offshore investors generally shunned the Uganda Securities Exchange between March and October 2021, considered the most opportune time to invest as it is characterised by declaration and payments of full year dividends, release of half year results and special corporate announcements.
Following the end of the offshore investor season, average trading turnover at the USE dropped to less than Ush20 million ($5,493) per day at the beginning of October while trading volumes fell to less than 200,000 shares per day.
Most of the offshore investors were reportedly active on the Stanbic Holdings, Umeme, DFCU and Uganda Clays counters in a scenario that yielded mixed results for those listed companies.
Since these investors — hedge funds, mutual funds, pension funds and life insurance funds — play in overseas financial markets mainly for higher returns, they often seek out competitive financial markets.
“Offshore investors are critical in driving share prices and share trading volumes in the stockmarket because of huge orders generated by them. But small trades ranging between 1,000 and 10,000 shares made by retail investors hardly moved the market and that is why some of the share prices remained stagnant since the year started,” said Isaac Mwigo, a stockbroker at Equity Stockbrokers Ltd.
“Most of the offshore investors that have been active this year on our books are based in Mauritius and the US and were keen on DFCU Ltd, Umeme Ltd and Stanbic Bank. However, offshore investors have generated less business for this market in 2021 compared with last year,’’ Mwigo added.
Most investors are driven by the desire for routine dividend payments and in return, trade activity associated with offshore players offers huge revenue streams for exchange, stockbrokers, dealers and Capital Markets Authority through commissions on shares trades.
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