Uchumi Supermarkets lands in trouble with Uganda regulator over listing obligations

Uchumi Supermarkets, a prominent retail chain, has recently been under the spotlight of the Uganda Securities Exchange due to non-compliance with listing obligations. The market activity has surged to 2.6 billion Ugandan shillings in turnover, exchanging 14.1 million shares across four counters, signifying a significant increase in investor activity. Oscar Emasu, a Research Analyst at Crested Capital, shed light on the recent developments in the market. Emasu highlighted the increased investor appetite for specific counters, such as Uganda Clays, Stanbeck, and Omeme, attributing it to positive financial performances and attractive dividends announced by these companies. Stanbeck, in particular, defied odds by posting a remarkable 21.5 percent growth in profits, largely due to lower than expected provisions amidst a challenging operating environment. Emasu also touched upon a struggling company that faced scrutiny for non-compliance with listing obligations, emphasizing the importance of regulatory compliance for maintaining shareholder confidence. The market in Uganda primarily relies on a few key companies to drive activity, mostly fueled by foreign investor interest in blue-chip companies like Stanbeck and Omeme. While local investors also participate, the significant influence of foreign investors on the market cannot be understated, as they account for over 90 percent of the value traded. In comparison to the Nairobi Securities Exchange, which has been experiencing capital flight, Uganda's market shows a similar trend with a high proportion of net foreign trades. The government's initiative to draft regulations to compel large foreign companies to list on the Uganda Securities Exchange aims to control capital flight and foster market growth. However, Emasu cautioned that this strategy may not always be effective, suggesting a more conducive environment to attract foreign companies voluntarily. Creating an environment that encourages foreign companies to list on the exchange could lead to sustainable growth and foster investor confidence. The future of Uchumi Supermarkets remains uncertain as the company navigates through its challenges of non-compliance and works towards resolving them. Investors and stakeholders will be closely monitoring the developments in the market to gauge the impact of regulatory interventions and company performances on shareholder confidence and market activity.