The fall in the shares of the companies could be attributed to a fall in demand as foreign investors withheld their money, while others sold off their share to either keep cash or reinvest in their home countries and other markets considered safer.
The market value of the companies listed on the Uganda Securities Exchange also known as the Total Market Capitalisation fell by more than 15% in the financial year ended June 2020, as economies in the region experienced shocks.
The fall in the shares of the companies could be attributed to a fall in demand as foreign investors withheld their money while others sold off their share to either keep cash or reinvest in their home countries and other markets considered safer.
The USE saw the value of the companies on with stocks on its counters, go from 22.66 trillion shillings to 19 trillion shillings. The most affected companies were those cross-listed from the Nairobi Stock Exchange, which all saw their share prices fall at varying rates. The cross-listed stocks are Centrum, East African Breweries Ltd, Equity Bank, Jubilee Holdings, KCB, Kenya Airways and Nation Media and Uchumi. It was largely the same for the locally listed companies which, apart from the unchanged BAT shares, all saw an overall decline in prices.
The value of the domestically listed companies, or the domestic market capitalization, is Shillings 4.27 trillion, having dropped 13% from Shillings 4.9 trillion. Uganda Clays share price fell by 40% followed by Cipla at 37.5%, while NIC prices fell by 30.8% followed by Umeme 18.3%, Stanbic 17.2%, Bank of Baroda 14.4% New Vision 4.6% and DFCU 3.7%.
This adds to the fact that for the last listing of shares on the market was in 2018 by Cipla Quality Chemicals Ltd. This has affected the drive by the Capital Markets Authority and other sector players to grow the stock market as the main source of long-term cheap capital to drive investments.
According to the Capital Markets Authority, apart from the foreign investors being influenced by the COVID-19 pandemic to sell off, the market was already being affected by the strengthening of the US dollar, which attracted investors back to the US.
But overall, CMA Chief Executive Keith Kalyegira says the market has been profitable for both long-term buyers of shares and the traders, adding that it is more important as a source of capital and preservation of personal money.
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