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Uganda: Austerity Slows Deals at Ugandan Bourse

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The total market capitalisation of firms listed at the Uganda Securities Exchange fell to Ush4.27 trillion ($1.15 billion) in 2019/20, from Ush4.91 trillion ($1.32 billion) in 2018/19.

According to Capital Markets Authority report, the drop was driven by substantial declines in share prices of locally listed companies, a trend that was escalated by the Covid-19 outbreak.

Cost-cutting and a fast growing digital wave to containing spread of Covid-19 currently sweeping through many sectors are also weighing down on the capital markets.

Data indicates that share prices of Uganda Clays Ltd, Cipla Quality Chemicals Industries Ltd, NIC Holdings Ltd and Stanbic Holdings Ltd fell by 40.55 per cent, 37.5 per cent, 30.77 per cent and 17.24 per cent respectively, between July 2019 and June 2020.

Consequently, the USE’s All Share Index declined from 1,614.82 points in 2018/19 to 1,369.84 points in 2019/20, the recent data shows.

The capital markets industry’s consolidated profit after tax dropped to Ush1.2 billion ($322,939) in 2019/20, from Ush1.6 billion ($430,585) in 2018/19. Total costs incurred by capital markets industry players rose to Ush14.5 billion ($3.9 million) in 2019/20 from Ush13.7 billion ($3.69 million) in 2018/19.

In contrast, total assets held by Collective Investment Schemes (CIS) also referred to as unit trust funds grew to Ush388.5 billion ($104.6 million) in 2019/20, from Ush173.5 billion ($46.7 million) in 2018/19. Total revenues generated by capital markets industry players increased to Ush16.4 billion ($4.4 million) in 2019/20, from Ush14.2 billion ($3.8 million) in 2018/19 the report says.