USE market year-on-year turnover decrease 87.9 percent in June 2020

By George Mangula

The trading volume for June 2020 was 3,862,908 shares with a turnover of Shs279,839,205,which was an 87.9 percent decrease from 64,829,448 shares worth Shs 2,317,738,533 that was recorded in June 2019. The COVID-19 pandemic continues to have adverse social and economic effects which have led to a sharp decline in financial market sentiments, says Uganda Securities Exchange (USE) Bulletin for the month of June.

Activity in the sixth month of the year declined by 43.7 percent to a turnover of Shs 280 million from Shs 497 million recorded in May 2020. This represents a daily average turnover of approximately Shs 14 million. However, volume traded rose to 3.8 million shares compared to 2.9million shares traded in May 2020. The number of deals presented a slight increase of 158 deals up from 92 deals executed in May 2020, with 68.5 per cent of the deals attributed to the Stanbic counter.

Turnover performance per counter

UMEME counter dominated activity for the month. It accounted for 70.63 percent of the total turnover, followed by Stanbic with 22.69 percent. In third position was Bank of Baroda Uganda with 3.75 per cent contribution. CIPLA, Uganda Clays Limited, DFCU, National Insurance Corporation Uganda and New Vision Limited combined contributed 2.93 percent to the total turnover. Cross-listed securities did not post any turnover positions during the past month.

Volume traded per counter Stanbic registered the highest volume of shares, with 68.48 percent, followed by UMEM with 20.88 percent. Uganda Clays Limited came third with 4.55 percent of the volume, while National Insurance Corporation Uganda was in the fourth position with 2.43 percent of the total volume.

Bank of Baroda Uganda and CIPLA accounted for 2.39 per cent and 1.21 percent, respectively. DFCU had the least number of shares traded amounting to 1,653 shares, representing approximately 0.04 percent of the total number of shares exchanged during the month.

Yields on Government securities

Treasury bills yields declined further in June 2020 as the market reacted to a more accommodative monetary policy stance taken by the Central Bank. The 91-Day, 182-Day and 364-Day rates dropped to 8.7 percent, 10.3 percent and 12.1 percent in June 2020 from 9 percent, 11.2 percent and 12.4 percent in May 2020, respectively. The medium- and long term portions of the yield curve also fell in June 2020. Yields on the 10-year and 15-year posted the largest drops month on-month to 14.4 percent and 14.6 percent from 15.6 percent and 15.7 percent in May 2020.

The 2-year, 3-year and 5-year rates close June 2020 at 13.2 percent, 14.4 percent and 15.3 percent, respectively. Bond market activity increased in June 2020 with a turnover of Shs1 trillion registered, up from Shs 796.6 billion in May 2020. The expansionary monetary policy stance coupled with a stable local currency witnessed over the past months has supported relative stability of the yield curve. Higher government borrowing ahead of the 2021 general elections presents a risk of rise in yields over the short to medium term.