Investors exit Uganda stock market for greener assets

Average stock market turnover amounted to less than Ush60 million ($16,001) per trading session in August while daily trading volumes averaged less than 500,000 shares according to recent USE trading reports, a sign of low institutional investor activity.

“Several large pension funds have exited their long-term investment positions in the equities markets because of diminished returns. Most of the equities portfolios have generated returns of around 3-4 per cent in Uganda. As a result, large investors have migrated to fixed-income assets, real estate and private equity investments that offer better returns in comparison,” explained Allan Lwetabe, director for investments at the Deposit Protection Fund of Uganda.

Total sales revenue recorded by MTN Uganda Ltd during the first six months of 2023 stood at Shs1.27 trillion ($338.7 million) compared to Shs1.09 trillion ($290.7 million) in 2022, according to the latest financial results. Its half-year dividend rose by 19 per cent to Shs5.6 ($0.0015) per share equivalent to a total payout of Shs125.4 billion ($33 million).

Profit after tax registered by Stanbic Holdings Uganda Ltd rose from Shs162 billion ($43 million) in June 2022 to Shs200 billion ($53 million) in June 2023 while its total income increased to Shs550.5 billion ($146.8 million) from Shs455 billion ($121 million).

Umeme Ltd’s total revenues grew by 19.9 per cent to Shs1.076 trillion ($286.9 million) while DFCU Ltd’s income rose from Shs187 billion ($49.8 million) in June 2022 to Shs198.5 billion ($52.9 million) in June 2023, while profit after tax increased from Shs18.7 billion ($4.98 million) to Shs29.3 billion ($7.8 million) during the same period under review.

However, the electricity distributor’s amortisation costs surged from Shs79 billion ($21 million) in June 2022 to Shs210 billion ($56 million) in June 2023 amidst a one-off impairment cost incurred by the company prior to the expiry of its 20-year concession agreement in March 2025. The company declared a half-year dividend of Shs24 ($0.006) per share.

In contrast, British American Tobacco Uganda’s profit after tax dropped by 2.07 per cent to Shs3.79 billion ($1 million) at the end of June 2023. Uganda Clays Ltd posted a loss of Shs690 million ($184,006) at the end of June.