RSE weathers global shocks ‘well enough’

Despite several markets in sub-Saharan Africa bleeding from low turnover, the Rwanda Stock Exchange (RSE) maintained a comparatively acceptable levels of activity over the first nine of the year, pushing up turnovers.

Data from the RSE show the market recorded a 46 per cent increase in turnover compared with the same period last year, largely pushed up by increasing appetite for bonds. In absolute terms, the market recorded Rwf34.4 billion compared to Rwf23.6 billion turnover in 2014.

The bonds turnover alone grew by an unprecedented 766 per cent, an indication that investors are conscious about the falling stock prices, choosing to put their cash into what they think are safe haven investments.

The Rwandan bourse is reeling from depressed stock prices, which have slid to their lowest, eating into investors’ profits and resulting in reduced trading volumes as some investors hold onto their shares. 

This downward swing in the stock prices has resulted in the bourse’s Share Index (RSI) to fall by a record 24 per cent from 235.6 points in January to 174.2 points in September, mostly caused by the depressed Bralirwa and Crystal Telecom stock prices.

However, the bond side grew as government turned to private money to fund public projects. In the first nine months, the government borrowed Rwf609 million from the market to fund its infrastructure projects.

This is a sign dipping stocks prices are causing shivers among investors. For instance, Bralirwa stocks, which once traded at more than Rwf440 in 2014 shortly after the brewer’s share split, have dropped, settling at Rwf280 in September. Before then, the Bralirwa counter was trading at Rwf860 a share.

At the beginning of November, the Crystal Telecom share price had dipped too, oscillating at a Rwf100 low before picking at Rwf104 from a high of Rwf144.

However, Capital Markets Authority (CMA) and RSE chief executives Robert Mathu and Celestin Rwabukumba, respectively, maintained that the price swings in a structured market are expected and not unique to Rwanda as most markets in the region are bleeding.

“Weak global commodity prices weakened the economic outlook for most of sub-Saharan Africa,” said Mr Mathu. “Coupled with currency bleeding that was experienced by most of these African countries, this has had investors adopt a wait-and-see approach on African stock market prices.”

Global commodity prices, especially minerals and oil, have dropped considerably, affecting very many economies across the world, especially those in sub-Saharan Africa.

“Followed by this was currency fluctuations that did not last for long.”

Mr Mathu added that, indeed, in terms of currency depreciation, the Rwandan franc was the least affected compared with the rest of the region.

Mr Rwabukumba assured that investors looking at long-term returns that they should not shy away from having stakes in the listed companies on the RSE, describing them as blue chip companies that are resilient to any external shocks.