Six-year drought. Uganda since 2010 has only had two local listings including Umeme in 2012 and Cipla Qality Chemicals Uganda Limited in 2018, which marked an end to a six-year drought at the Securities Exchange.
MTN and Airtel are expected to be the newest companies on Uganda’s stock exchange premiering as the first telecom companies on the bourse.
This follows a requirement in the national telecom operator licence under which they both operate, to float 20 per cent of their companies on the Uganda Securities Exchange by 2022. It was also prescribed in the national broadband policy of 2018.
MTN will be the biggest Initial Public Offering (IPO) on the bourse since Umeme in 2012. Uganda since 2010 has only had two local listings including Umeme in 2012 and Cipla Qality Chemicals Uganda Limited in 2018, which marked an end to a six-year drought at the exchange.
Dull stock market
In floating shares, the telecoms will be making an entrance into a not so vibrant stock market.
Uganda’s 24 year-old stock market has a membership of 17 companies, with nine of them locally listed while eight are cross listed. However, USE is characterised by few local listings and low liquidity.
Low liquidity means there is a limitation in buying and selling shares on the secondary market which is the point where shares are traded after a company has sold shares at the IPO stage. This means that you do not have the liberty to easily dispose of your shares in a company because there is no willing party demanding for them [low demand].
In part, the low liquidity is attributed to the static share prices of the companies on the bourse.
Mr Aeko Ongodia, the chief executive officer, Xeno investment management, a technology assisted company that helps individuals and institutions plan, save and invest for their financial goals, says sustained double digit returns on the stock market were last seen between 2013 and 2015.
“The stock price performance of the currently listed companies has been flat over the years, although the underlying businesses themselves have performed well and consistently paid dividends to investors. None of them has put on amazing growth in share price to excite investors, especially retail investors,” he notes.He emphasizes that no listed company has seen explosive year-on-year growth in revenue to be classified as growth stocks. Most companies are either mature or in mature/saturated industries, limited by geography with no plans of expanding regionally or […]