USE chief calls for lower interest rates

By David Mugabe

The Uganda Securities Exchange (USE) chief wants interest rates to be lowered further so that investors can return to the stock market.

Joseph Kitamirike, the USE chief executive officer, believes that 2013 will be more active, but wants banks to further reduce interest rates as an incentive for greater market participation.

“When interest rates are high, it is bonds and Treasury bills that are attractive and investors run there. But we want investors to come here (USE),” said Kitamiriike.

His remarks follow anticipated action from commercial banks who are reportedly set to cut rates by one percentage point, although Bank of Uganda (BOU) held the benchmark Central Bank Rate at 12% for a third consecutive month.

This would push rates to an average of 21% in the days ahead.

The Central Bank’s rate eases the pressure on commercial banks to borrow.

“We expect more listings (in 2013). Hopefully with the increased number of investors, we should have a more exciting market.

“We have some corporate actions and some listings, between March and June, we should complete the numbers,” said Kitamirike.

Umeme completed its primary listing late 2012, while Baroda bonus issue is due in a few weeks.

The first quarter is heating up with listed corporates expected to announce their full year results in the next few weeks - a development that should create renewed interest and activity on the market.

On the primary market, Umeme maintained its impressive activity, selling 500,000 shares at sh300 per share and posting sh150m in turnover.

But Stanbic Bank stole the day, selling over 5.6 million shares and realising sh142m in turnover after trading at an average of sh25 per share.

Stanbic also had the largest bids for over 10 million shares, which were not snapped up or matched with 3.4 million shares on offer.

Bank of Baroda sold 23,500 shares at an average of sh280, which resulted in turnover of sh6.6m.

Uganda Clays trading at an average price of sh35 sold 50,000 shares to pick sh1.75m in turnover. Overall, turnover was sh300m by close of business, while 6.2 million shares were sold.