Investors are shifting investment focus to buying fixed assets as the securities market tumbles due to the coronavirus pandemic.
The pandemic according to Paul Bwiso the executive Director Uganda Securities Exchange has had a toll on companies. He said investors started pulling out from the market as early as February hence registering a decline in trades from 283 deals in March to 94 deals in May 2020.
Bwiso said the outbreak of coronavirus has forced market players to scale back, shift investment focus while others held onto the money they had earned in the wake of the uncertainty.
He said the situation was worsened by the withdrawal of international investors from the market especially companies from the UK, UAE, South Africa and the US among others.
“We started off on a high with Shs 14 billion turnover but when international investors started pulling out, the drop started, up to now the sector is yet to see any signs of recovery,” he said.
Bwiso explains that activities started to decline steadily mainly between the month of March to May 2020.
In February the market turnover stood at Shs 5.4 trillion and dropped to Shs 2.1 trillion in March.
Even when they thought April was worse at Shs 1.4 trillion the markets tumbled again in May from Shs 502 million shilling turnover to Shs 280 million in June and Shs 272 million recorded in the month of July.
“These are figures we have never witnessed in the market. The stock prices have also taken a hit. Overall local share index dropped 3.8% and the all share index dropped 28.4%. We saw a drastic drop in prices across listed companies,” Bwiso said.
This in turn has forced many investors to withdraw from investing in the sector to buying fixed income assets, which are considered less riskier compared to equity markets.
He said some people had resorted to investing in treasury bonds, while some are investing their money in fixed deposit and saving accounts.
“For the first time in history, BATU traded only 5 shares worth 250,000, New Vision traded only Shs 1.4 billion but UMEME performed better because their prices were stable,” he said.
But even with the status quo, Bwiso was optimistic that the sector will recover.