Trading on Uganda Securities Exchange registers sharp decline in first quarter

The Uganda Securities Exchange has reported a significant decline in trading activities in the first quarter of 2021, with a turnover of $954,000 compared to $2.20 million recorded in the fourth quarter of 2020. The outbreak of the COVID-19 pandemic has undoubtedly played a role in this decline, with many investors adopting a cautious approach in light of the uncertain economic environment. However, other factors have also contributed to this performance, according to Oscar Emasu, a Research Analyst at Crested Capital. Emasu highlighted the lack of dividend payments from companies in the first quarter, with only two companies, New Vision and Stanbic Bank Uganda, issuing dividends during this period. As a result, investors were hesitant to engage in trading, waiting for better prospects later in the year. Despite the challenges faced in the first quarter, there are signs of improvement in the market, with increased investor activity observed in June due to dividend payments by several companies. Emasu identified Stanbic Bank Uganda and Bank of Baroda Uganda as attractive counters for investors, with promising prospects for growth and returns. He also discussed the impact of government relations on companies such as Umeme, which is owed $400 million by the government. Emasu emphasized the need for positive engagement between regulators and companies to ensure stability and investor confidence in the market. Furthermore, he touched on the potential opportunities in the oil and gas sector for Stanbic Bank Uganda, following the recent signing of the Final Investment Decision (FID) for a major pipeline project. The performance of Bank of Baroda Uganda was also examined, with the bank's conservative approach and strong credit position contributing to its resilience despite the challenges posed by the pandemic. Emasu commended Bank of Baroda Uganda's profitability and emphasized the importance of product diversification and effective balance utilization for sustained growth. Overall, while the Uganda Securities Exchange faced a decline in the first quarter of 2021, the market shows resilience and potential for recovery and growth in the coming months.