Foreign investors are weighing their options about investing in East Africa’s stock markets as the regional governments, faced with dwindling foreign direct investment flows, have started implementing programmes to attract foreign investors to certain sectors.
Stock exchanges are barometers of economic performance and data indicates that activity on the Kenyan and Uganda securities exchanges picked up during the first two months of 2018. Tanzania’s and Rwanda’s faltered, largely due to the nature of their political and economic environments.
Kenya recorded a slight increase in activity on blue-chip counters following successful conclusion of the general elections, with foreign investors renewing interest in telco Safaricom and banking stocks.
In Uganda, increased public spending on infrastructural projects and particularly the planned expenditure on oil-related investments has given additional impetus to the economy and triggered more activity on the stock market, according to the Bank of Uganda.
In additional the country’s inflation has continued to stabilise at single digit levels settling at 2.1 per cent last month.
Aside from the dampening effect of a prolonged electioneering last year, banking stocks in Kenya were also impacted by the capping of the interest rates, which forced the lenders to channel their money into government securities rather than to the private sector.
The interest rate control law, which was introduced in September 2016, put a ceiling on lending rates at four percentage points above the Central Bank Rate that currently stands at 10 per cent.
In Tanzania, the percentage of foreigners who sold their shares in companies listed on the Dar es Salaam Stock Exchange (DSE) between January and the first week of March, stood at 81.17 per cent, compared with locals at 18.83 per cent.
The NSE All Share Index increased 2.8 per cent to 181.02 as at March 6, from 176.07 recorded on January 8, while the Uganda Securities Exchange (USE) All Share Index more than quadrupled to 8,684.53 from 2,017.92 in the same period.
The DSE and Rwanda Stock Exchange (RSE) All Share Indices fell 1.36 per cent and 0.01 per cent to 2,357.02 and 133.03 from 2,389.59 and 135.05 respectively during the same period.