Trading on Uganda’s exchange to pick up

March 6, 2017 in Financial Services, Investment, Markets by Editor

March 6–Trading in Uganda’s financial markets is expected to pick up in the medium term, following a slowdown much of last year, according to members of the Uganda Financial Markets Association (ACI-FMA).

“The financial markets in Uganda are nascent; the products are very new, but overall, there are big opportunities for Uganda’s business people going forward,” Oscar Mwanga, the ACI Chairperson has said.

A recent briefing paper from Uganda Securities Exchange (USE) indicated that the equity turnover realized in 2016 was 187.3 billion shares from a volume of 890 million shares, while the turnover realized from the fixed income segment was 13.6 billion from a volume of 129 million corporate bond units.

With a total turnover of 200.9 billion shares, activity in the equity segment was dominated by dealings on  the Umeme and Stanbic Bank (Uganda) counters accounting for over 80% of the total USE turnover.  Umeme is the electricity distributor while Stanbic is Uganda’s leading commercial bank.

The only cross-listed counter that traded was Kenya’s Centum. Trading activity however was dominated by the local counters accounted for over 99% of the total turnover and volume.

Mwanga said global trends, as well as the recent unexpected reduction in the Central Bank Rate (CBR), have had a knock-on effect on the performance of the financial markets in Uganda, though the markets remain vibrant.

He said Uganda has a good number of professional dealers, but investment in the sector is still very low due to limited knowledge about the opportunities that exist for both small and large investors.

“Going forward, there’s need to build knowledge among the business community to create awareness and inspire them to invest in our local financial markets,” Mwanga said.

He said globally, investors are redirecting much of their money in investment to the financial market which is not the case in Uganda. He said the financial markets being a new phenomenon in Uganda, it will take time for investors to understand its operations and benefits before they can gain confidence.

ACI Uganda is a member of the global ACI Financial Market Association. The not-for-profit association is championing the development and growth of Uganda’s financial markets through different components.

Mwanga said the association is contributing to this by building technical skills and knowledge among dealers, through promoting professional training and competencies of new dealers on new techniques and best practices in providing foreign exchange and money markets products, Ensuring global standards of professionalism and ethics, foster local and international cooperation within the framework of the foreign exchange dealing profession to mention but a few.