MARKET DATA REVIEW : Year of challenges and opportunities for stock markets

>Last week we dwelt on the concept of return and risk on investment in securities (i.e. shares and bonds) listed in the stock market. We learnt that the return on an investment consists of dividend, interest, rent or other income added to the increase in the value of the asset over a set period.

Recently, the Dar es Salaam Stock Exchange (DSE) has been taking specific measures to address some of our specific local needs and challenges – it doesn’t serve better for any of us that after more than 15 years since the operationalization of the stock exchange in our economy, it remains just a superfluous high level concept, neither has it been understood nor efficiently used by our local communities to address some of their long-term capital needs on one side or investment...

Demutualisation of stock exchanges has captured media headlines in recent years — it seems like most exchanges are doing it (except for Africa, for obvious reasons). A number of exchanges across the globe have demutualised since this idea came into the public attention, especially after the first incident of demutualisation by the Stockholm Stock Exchange in 1993.

Since the enactment of the Capital Markets and Securities (CMS) Act, Cap. 79 of 1994 and the establishment of the Capital Markets and Securities Authority (CMSA) in 1996, there has been several developments in the Capital markets in Tanzania.

>Last week I talked of the need to consider local content, participation and economic empowerment in policies and laws we make, especially those involving key sectors of the economy or whenever we execute key policies that impact economic and social aspects of our people.

>This is the third of a series of four articles in which I seek to share my view on the state of Africa’s financial markets -- their roles in propelling socio-economic prosperity, opportunities and challenges that we face as we try to develop our financial markets.

There are only 15 domestic companies listed in our local stock exchange; this number stands unfavourably when compared to over 30 companies listed in Ghana, over 60 companies in Kenya, over 250 companies in Nigeria, over 360 companies in Egypt and over 450 in South Africa.

There are two major encouraging statements that came to our attention recently, these statements came from the government: (i) the possibility of repossession of previously privatised state owned entities that were sold to some investors; and (ii) state owned entities, agencies and parastatals are now required to refocus on becoming more efficient and raise their financial needs from the local financial market.

>Privatisation is the process of transferring ownership of a business, enterprise, agency, public service, or public property from the public sector (a government) to the private sector.