Competition for trustee services up with GDP growth
Jul 05, 2013
The share markets are witnessing increased competition for custodial, trustee and fund manager services as savings go up with growth of Uganda’s Gross Domestic Product (GDP) in the last financial year.
By Samuel Sanya
The share markets are witnessing increased competition for custodial, trustee and fund manager services as savings go up with growth of Uganda’s Gross Domestic Product (GDP) in the last financial year.
Standard Chartered Bank is the latest to launch custodial services amidst competition from four other service providers. The service is tailored for retail customers interested in investing in unit trust funds through their investment clubs.
“We have done our market research and we have found that the appetite for trustee and custodial services is on the rise,” said Carol Mubangizi, the Stanchart head of securities services.
The finance ministry is promoting investment clubs as a vehicle to higher savings in the country. Investment clubs hold close to Ksh100b (sh2.9trillion) in Kenya and one in every three Kenyans belongs to a Kyama, or investment club.
Investment clubs have formed a national association to rally Ugandans to save and invest more. Y-save, a watoto church based investment club holds more than sh1b in savings and is one of the biggest in Uganda.
Clubs will be able to invest from as little as sh50,000. African Alliance Uganda has applied for a fund managers license to resume its unit trust service as the economy grows.
Uganda’s economy grew at 5.1% last financial year from 3.4% previously, while headline inflation has been minimal at 3.4% from 30% in 2011, drastically increasing the value of money and savings.
The custodians will provide net asset value verification, compliance monitoring and annual reporting to unit holders for a minimal fee.
“The turnover on the share markets for the first quarter this year is much larger than last years. We are witnessing a real recovery in the economy,” Arthur Nsiko of the African Alliance Securities said.
Huge prospects on the Umeme counter have seen its share price hit sh360 on Wednesday from sh340 on Tuesday. The counter saw the highest turnover at sh1.99b on Wednesday, up from sh8.7m a day before.
As electricity demand continues to outweigh supply, institutional investors and increasingly retail investors are predicting huge returns on this counter in coming years.
Umeme’s revenues inched up to sh860b in 2012, beating targets from sh457b a year before as connections doubled to 513,000. Higher revenues are expected at the end of 2013.
Total turnover came in at sh83m on Tuesday with the all-share index declining to sh1,499 from sh1,522 largely due to cross listed stock. The Local Share Index also declined to sh227from sh250.
dfcu saw sizeable demand on Tuesday selling sh42m worth of shares, with NIC selling sh10m and New Vision selling sh98,000. Stanbic traded sh21m. The other counters recorded zero activity.