QUESTION: How would you describe 2006 for the stock exchange and capital markets?
ANSWER: 2006 has been a year of continued growth. Turnover on the stock exchange increased to sh9b from sh5b in 2005.
The Government bond market was consolidated with 10 new issues worth sh310b. We had two new listings, the Standard Chartered Bank bond and Jubilee Holdings.
The all share index rose to 850 points from 760. Most importantly, Ugandans are beginning to learn more about opportunities of investing in the stock market.
I am excited that as a nation, we are beginning the journey of deepening our domestic financial sector and learning the importance of mobilising domestic resources for productive enterprises.
Has Uganda Claysâ€™ share split had any impact on the exchange?
Uganda Claysâ€™ share split was the first corporate action of this sort.
It showed that the company had done well with returns of over 550% in the last five years. The share split should improve liquidity in the long term. Uganda Clays is an example of a small and medium company, which has benefited from good management and listing on the exchange. When Uganda Clays listed, it had market capitalisation of sh2b.
From this example, I want to explore how we can help small and medium enterprises benefit from medium-long term funding from capital markets.
The market expected many listings this year like Kinyara, uganda telecom and National Insurance Corporation. What happened?
All those listings are in the pipeline.
How has the inflation rate affected the stock market?
Containing inflation is key to success of capital markets. Inflation erodes value, wealth and returns on capital marketsâ€™ investments. I would rather preside over a situation where wealth is created not destroyed.
As Friedman, the great economist once said, inflation always and everywhere is monetary policy phenomena. I am satisfied that the monetary policy authorities have controlled this animal called inflation.
All the East African stock exchanges are automated except Uganda. How do we catch up or compete?
We have all the infrastructure for automation. We are awaiting passing of the CDS Bill. The finance ministry has promised that the CDS Bill will be fast-tracked with other critical commercial law bills. I am optimistic this will be done in the first quarter of next year so that we can move forward.
Can you predict what Stanbicâ€™s share price will be on the first day of trading?
I do not want to predict that because prices can go up or down.
I am excited that more Ugandans are participating in this issue, which is based on solid fundamentals. Ugandans are beginning to get interested in saving with capital markets. There is continued confidence that our capital markets have integrity and they are well regulated and efficient.
Investment is all about confidence! All investors black, white or red want the same thing, a good rate of return on investment, reduced risk and predictability of fundamental factors!
What is the bourseâ€™s focus and expectations in future?
The exchangeâ€™s focus in the next year is continued deepening of the financial sector, advocacy for a conducive economic policy, pension reform and funded collective saving schemes, educating people about savings and capital markets, listing more financial instruments and full integration with the East African capital markets.
We have made tremendous progress in the last five years. I remember those days when we had one product trading only sh50,000. I am confident that we shall continue growing, reflecting the growth of our domestic financial architecture.
Securities exchange turnover hits sh9b