Corporate deals to stir dull market

By David Mugabe

The stock market should see better days ahead with anticipated major corporate activities  expected towards year end and beginning of new year.

The biggest is the Umeme initial public offer (IPO) and listing scheduled for November 30, 2012. Umeme’s offer at sh275 should stir up the market that is devoid of activity even though analysts viewed the price offer as being high for an IPO.

The other is Kenya supermarket chain Uchumi which has indicated it will cross-list in Uganda and also do the same in Tanzania and Rwanda in December. 

According to reports quoting Uchumi chief executive Jonathan Ciano , once they receive a go ahead from the regulator, they will register and cross-list on Uganda, Tanzania and Rwanda stock exchanges over the counter market. Should this be achieved, this will give the market a major push.

The other corporate action is the National Insurance Corporation (NIC) rights issue that the insurer wants to undertake to shore up its working capital as required by the Central Bank. NIC is also awaiting regulatory approvals following the resolution passed by the shareholders last week.

The above three activities should light up a market that on Tuesday recorded no single trade.

“There should be some upturn and activity towards year-end, but we wait to see whether this can be sustained,” said one market analyst.

On the market, despite a whooping offer of more than 3m Stanbic shares, this was not marched by the 2.9m shares bidding shares citing a price mismatch. Stanbic is trading at an attractive sh20 per share.

There were also other offers of over 100,000 shares on the NIC counter and another 122,000 on the Uganda Clays (UCL)counter that were not taken up. The rest of the companiescounters remained mute with neither demand nor supply. 

There are currently 14 local and cross-listed companies on the stock exchange and should Umeme and Uchumi enter the 14 year old bourse would be a more diverse market but still struggling with liquidity and a failure to attract the mid-level companies especially the small and medium sized enterprises.