Uganda Stocks Surge as Bond Yields Ease Off

Uganda’s equity market is gaining momentum after a period dominated by government bonds. Data from the Uganda Securities Exchange (USE) shows equity turnover climbing from Shs10.03 billion in January to Shs13.75 billion in February, with traded shares rising from 73.8 million to 88 million and deals increasing from 480 to 673. This uptick reflects wider investor participation rather than isolated big trades.

MTN Uganda led the charge, accounting for 67-74% of trading value and hitting a record Shs461 per share amid spin-off speculation for its mobile-money unit. Stanbic Bank Uganda topped volumes at nearly 49.6 million shares in February, while Airtel Uganda and Bank of Baroda Uganda saw sharp gains in activity. Bank of Baroda stands out with low non-performing loans and an 8.16% dividend yield.

MTN Uganda and Stanbic Bank have emerged as the market’s anchors, drawing liquidity and shaping sentiment. In contrast, Umeme has lost appeal due to its expired concession and ongoing London arbitration with the government, prompting investor caution.

The revival aligns with cooling bond yields: three-year bonds fell to 13.295%, 10-year to 14.5%, and 20-year to 15.49% by late February, down from last year’s 15-17% peaks. Eased borrowing needs, improving liquidity, and future oil revenues are expected to sustain this trend, potentially dropping yields to 6-14% in coming years.

Financial and telecom stocks attract capital for their stability, dividends, and growth in digital services. The USE All Share Index jumped to 1,937.13 by February’s end from 1,655 in January.

Source: Daily Monitor (Uganda)