This archive report was first published on 8 July 2019.
Published on July 8, 2019, the Uganda Securities Exchange (USE) is facing uncertainty amid half-year results. Despite modest half-year results, limited movement in share prices, and the likelihood of more exits by foreign investors in the second half of 2019, the exchange has seen increased activity at the counters of Stanbic Holdings Ltd, Bank of Baroda Uganda, DFCU Ltd, and Umeme Ltd.
The activity was triggered by the run ahead of the book closure dates, which are deadlines issued by listed companies requiring investors to either acquire or maintain shareholding in the business by the specified date to be eligible for dividend payments. Book closure dates for the four listed firms materialized in May and June, prompting many institutional investors to escalate buying of shares on those counters during that period to benefit from handsome dividends declared for 2018.
Stanbic issued a dividend of Ush1.9 ($0.0005) per share for 2018, while Bank of Baroda increased its dividend per share from Ush6 ($0.002) to Ush10 ($0.0027) for 2018. Daily turnover at the USE rose to more than Ush1 billion ($267,820) in some trading sessions, while volumes surged to more than 100,000 shares in May and June, according to market reports.
Patrick Mweheire, managing director of Stanbic Bank Uganda and chair of the Uganda Bankers Association, noted that high capital expenditure demands exerted by the central bank on affected banks could complicate their financial challenges. He cited setting up local data management centers, which are costly to install and maintain for less profitable commercial banks.
According to the latest data from the USE, the total turnover for April-June 2019 was Ush35.4 billion ($9.5 million), while total trading volumes amounted to 540 million shares. Stanbic accounted for 91 per cent of total turnover and 50 per cent of overall trading volumes during the second quarter of 2019, followed by Umeme.
USE chief executive officer Paul Bwiso stated that institutional investors are less likely to remain active during the second half of this year, which may result in flat trading figures for the end of 2019. He also noted that half-year results for listed companies seem uncertain and their impact on trading patterns is not predictable at this time.
