Dar Es Salaam Stock Exchange CEO speaks on the impact of COVID-19

In Tanzania, the Dar Es Salaam Stock Exchange has faced significant challenges due to the impact of the COVID-19 pandemic. The exchange recorded zero trading activities last week, a stark reminder of the adverse effects the global health crisis has had on financial markets worldwide. The stock exchange, which has been in operation for the past 20 years, traded only government securities valued at $7.2 million by the end of the week, with no activity on equity counters. In a recent interview with CNBC Africa, Dar Es Salaam Stock Exchange CEO, Moremi Marwa shed light on the current situation and outlined some of the key factors contributing to the lack of trading. Marwa highlighted that while cases of trading failures are not uncommon in markets, the recent mismatch in pricing between offers and bids on the equity side resulted in the lack of activity. Although there was a significant price depression due to foreign investors selling off their positions, Marwa pointed out that this could present an opportunity for local investors to enter the market at low prices and benefit from future price increases. However, he noted that retail and institutional investors have been hesitant to take advantage of the situation, emphasizing the need for more investor engagement and education in the region. The CEO also addressed concerns about the future of stock markets in Africa amidst the pandemic, stating that capital markets will remain integral for entities to raise finances for both corporate and government projects. While the current situation calls for innovation and structural changes in the market, Marwa stressed the importance of using technology to reach a wider audience and make capital markets more accessible. Despite the decline in equity trading, there has been a surge in appetite for fixed income instruments such as government bonds, indicating a shift in investor preferences towards less risky assets with relatively stable returns. This trend highlights the resilience of the financial markets in adapting to the challenges posed by the pandemic and the evolving investment landscape in Tanzania.