Recovering global and local economies spur equity market as it grows by 2.6% in value

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Dealers during a trading session at the local exchange. The bourse performance inched up last year, recovering from periods of poor runs over the previous years. / File

Resurgent global and local economies propped up the Rwanda Stock Market (RSE) as it recovered from periods of poor performance to record big gains last year.

“Last year, the Rwandan economy again showed resilience which boosted investor confidence compared to 2016. Our index (Rwanda Share Index - RSI) went up to close at 13 per cent while volumes sold also increased on secondary market on the back of growing investor numbers,” Pierre-Celestin Rwabukumba, the RSE chief executive officer, said in an interview.

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Rwabukumba projects the bourse to do even better this year.

The index for domestic listed companies closed at 135.38 points or 12.9 per cent growth compared to 119.84 points in 2016, mainly driven by bullish Bank of Kigali and Bralirwa counters, as well as I&M Bank Rwanda’s listing last March. The All Share Index, which measures performance of all companies listed on the exchange, rose by 4.8 per cent, closing at 133.48 points, up from 127.26 points the previous year.

RSE market capitalisation closed at a high of Rwf2.9 trillion in 2017, up from Rwf2.7 trillion in 2016, which is a rise of 6.8 per cent year-on-year, preliminary RSE market performance data indicate.

The local exchange is also projected to continue its recovery and progress this year, building on this tremendous performance. According to Rwabukumba, the impressive performance recorded last year was also driven by the ‘renewed’ confidence in the economy, generally and perception of stabilisation across all the listed companies.

Investors had previously shied away following a downward trend over the past few years caused by global events like poor commodity prices and the general instability in the world economy, the RSE said.

“We foresee continued recovery and progress in general if commodity prices continue to stabilise. For Rwanda, the mining sector should help the balance of payment coupled with Made-in-Rwanda campaign and growing services sector, especially tourism and other subsectors,” the RSE chief said over the weekend.

Rwanda’s economy grew by 8 per cent in the third quarter of last year up from 4 per cent in quarter four of 2017. It projected to expand 6 per cent last year, better than 5.8 per cent growth rate registered in 2016. Inflation rate eased to 2.2 per cent in November 2017 as foodstuff prices dipped, among others.

The bond market continued to expand, growing to Rwf5.19 billion in total turnover last year, indicating a change of 208.6 per cent in value from Rwf1.68 billion recorded the previous year, Rwabukumba said.

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Counter performance

Bank of Kigali, which was the best-performing counter this year, closing at Rwf300, up Rwf72 from Rwf228 on January 3, 2017. Beverages maker, Bralirwa also regained some of its lost value, ending at Rwf150 compared to Rwf140 recorded during the first trading session on last year. I&M Bank was at Rwf95, which was however lower than its opening share price of Rwf105 on March 31.

The biggest loser of the year at the bourse was Crystal Telecom at Rwf66, indicating Rwf22 loss in share value down from Rwf90 registered during the first trading session of the year.

Two of the cross-listed firms were also up, with KCB closing at Rwf350 and Equity Rwf340 at the end of the year, while NMG was unchanged throughout the year at Rwf1,200 and Uchumi Rwf104. NMG never transacted any shares and was the least attractive counter during the year as it rarely received bids. Generally, all the cross-listed counters are largely quiet but Uchumi and Equity are the ‘most active’ of the lot.

Sector experts say the counters never trade because most of the shareholders are in Nairobi, and also because the process involved in buying the shares of these firms is tedious and long. It is also due to the fact that some of firms are listed for purposes of having regional presence and expanding their brands, which could explain why they never bothered about their inactivity on the local exchange.

2017 milestones

The biggest milestone was the listing of lender, I&M Bank at the end of March 2017. The government offloaded its 19.8 per cent shares in the bank to the public through an IPO as part of the ongoing privatisation programme.

The initial public offering received overwhelming interest and was oversubscribed by 209 per cent and the counter opened at Rwf105 on listing on the Rwanda Stock Market (RSE) on March 31. The IPO price was Rwf90. The listing increased activity on the local bourse and attracted more new investors due to the expanded list of market offerings. It was also to greatly impact the exchange market capitalisation levels and performance, which saw the bourse close 2017 at record highs.

Bond issuance programme

The government continued its bond issuance programme started in 2014 with four more Treasury bonds in February, May, August and November last year with a total face value of Rwf45 billion and different tenures – two seven-year and two five-year Treasury bonds. All the TBs were oversubscribed.

The Treasury bond isssuance programme seeks to support the development of the local capital market and also encourage Rwandans to save and invest. The proceeds from the TB sales are invested in infrastructure projects, according to government.

2016 performance

RSI declined by 18.36 per cent while ALSI was down 2.56 per cent last year and market capitalisation dropped by 5.6 per cent to $3.4 billion from $3.6 billion in 2015. The equity market recorded Rwf17.1 billion in value falling 53.6 per cent.

However, the bond market registered growth of 86.2 per cent over the period.