The Capital Markets Authority (CMA) has released the performance of Uganda’s capital markets for the period of 1st July 2021 to 30th September 2021, the third quarter of 2021.
According to the analysis, Uganda’s Collective Investment Schemes (CIS) managers had a total of Shs857.3 billion in Assets Under Management (AUM). This growth represented an increase of 17.1% from Shs731.9 billion registered at the close of the second quarter of 2021.
Collective Investment Scheme is an investment product that allows an investor to pool savings with other investors, creating a large pool of funds to be invested on their behalf by a professional CIS manager.
On an annualized basis, it is estimated that AUM also grew by 94.9% from Shs439.9 billion recorded in a similar period in 2020 (3Q2020).
The total number of CIS accounts at the end of June 2021 was estimated at 25,511 compared to a total of 20,668 investor accounts at the end of the previous quarter, an increase of 23.4%. This growth in AUM and clients can be attributed to increased awareness about the benefits of investing through CIS vehicles among local investors.
Domestic market capitalization at the Uganda Securities Exchange (USE), which accounts for the value of locally listed stocks fell by 1.3% from Shs4.33 trillion at the end of June 2021, to Shs 4.28 trillion at the end of the review period. This decline was mainly due to share price losses registered on seven locally listed counters. The share prices have been affected by, among other things, the negative market sentiment owing to the effects of the Covid-19 pandemic. The lockdown measures announced in early June 2021 further led to low investor demand for stocks.
On an annual basis, domestic market capitalization grew by 0.3% from Shs4.26 trillion at the end of a similar period in 2020. The growth in domestic market capitalization was due to the increase in the share prices of two locally listed counters SBU (9.9%) and UCL (6.3%).
Equity turnover at the Uganda Securities Exchange grew by 20.8% from Shs5.9 billion registered in the second quarter of 2021 (2Q2021) to Shs7.2 billion in the third quarter of 2021.
The value of government bonds traded on the secondary market fell by 14.7% to Shs10.5 trillion in the third quarter of 2021 from UGX 12.3 trillion in the second quarter of 2021. Average monthly turnover also fell by 14.6% to Shs3.5 trillion in the review period from Shs4.1 trillion previously.
Additionally, the government bond turnover ratio for the third quarter of 2021 stood at 51.1%, compared to 63.6% in the second quarter of 2021. The decrease in turnover can be attributed to, among other things, the second national lockdown measures that were announced in early June 2021.
The capital markets are projected to register increased activity from both domestic and foreign institutional investors as the Government gradually eases the Covid-19 containment measures that were announced in early June 2021.
The increased rollout of vaccines against Covid-19 is expected to stimulate further re-opening of the Ugandan economy allowing most sectors to fully open, thus supporting the re-entry of off-shore investors. It is also important to note that the anticipated listing of MTN Uganda on the USE before the end of the year is also expected to increase market activity.