Signs of volatile trading patterns at the Uganda Securities Exchange (USE) this year weighed heavily on business activity as large investors increased their exposure to blue chip companies but the real fallout on stockbrokers’ commission incomes remains unclear.

 

Volatile trading patterns were mainly experienced in the second half of 2024, according to stock market trading reports obtained by The EastAfrican.

For example, weekly trading turnover posted by the USE jumped to Ush8.91 billion ($2.4 million) between November 4-8 compared to Ush202.99 million ($55,387) recorded in the previous week.

Total trading volumes increased from 3.3 million shares to 42.98 million shares during the same period under review, according to data compiled by Crested Capital Ltd.

MTN Uganda Ltd accounted for the lion’s share of trading turnover with total trades valued at Ush8.28 billion ($2.26 million) followed by Umeme Ltd with Ush557.86 million ($152,214) recorded in transaction activity.

In contrast, weekly trading turnover dropped to Ush2.93 billion ($799,462) between November 11-15 compared to Ush8.91 billion ($2.4 million) registered in the previous week.

Umeme Ltd recorded a specific turnover of Ush2.82 billion ($769,448) during the period under review followed by MTN Uganda with Ush34.42 million ($9,392) in transaction activity captured on its counter.

Weekly trading turnover declined to Ush71.66 million ($19,553) between 2November 18-22 compared to Ush2.93 billion ($799,462) recorded in the previous week.

Total trading volumes similarly fell from nine million shares to 1.33 million shares during the same period under review.

Weekly trading turnover reduced to Ush102.35 million ($27,927) between 2nd and 6th December 2024 compared to Ush1.33 billion ($362,896) posted in the previous week.

MTN Uganda Ltd registered specific turnover valued at Ush42.90 million ($11,705) followed by Umeme Ltd and Stanbic Holdings Uganda Ltd with Ush28.64 million ($7,815) and Ush11.57 million ($3,157) respectively, the data shows.

“Higher trading turnover implies higher commission incomes for us. The volatile trading patterns directly lead to reduced trading activity on some days,” said Calvin Bateme, an equity analyst at Crested Capital Ltd.“The practice of paying interim dividends has become quite popular in this market and is responsible for such swings highlighted in trading turnover levels. Some investors often rush to take advantage of interim dividend offers but do quiet as soon as they have gotten sufficient extra shares for their portfolios. Stockbrokers have also taken advantage of interim dividends to market new trading opportunities to clients which generate extra income. Other investors usually take up new dividend positions towards end of year that are targeted at companies whose full year reporting period coincides with the calendar year,” explained Edward Ruyonga, an equities dealer at Dyer and Blair Uganda Ltd.

Stockbrokers get buy orders of as much as 100 million shares on one counter and take weeks to execute them. Finalising execution of those orders involves a lot of conversations between the broker, USE and fund managers.

For example, a stockbroker might mobilise 10 million shares out of a total of 100 million shares required by a client in one week but they might get nothing for the following two weeks’ period.

Profitability is the most important consideration for us when choosing what shares to invest in,” observed Mubbale Kabandamawa-Mugalya, Investment Manager at Sanlam Investments Uganda Ltd.

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