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80 percent of electronic share accounts are empty, says USE
Mr Paul Bwiso
What you need to know:
- USE says that only 41,000 securities central depositary accounts out of the 200,000 have shares to trade
The Uganda Securities Exchange (USE) has said more than 160,000 of the 200,000 securities central depositary accounts have no shares to trade, which presents serious challenges for equity markets at the exchange.
Speaking during the CEOs, CFO (chief financial officers) and SC (company secretaries’) investment forum in Kampala, Mr Paul Bwiso, the USE chief executive officer, said there are only 41,000 securities central depositary accounts that have shares, which are the only ones that can trade at the bourse.
“There are more than 200,000 securities central depositary account compared to 38,000 accounts two years ago. But it is only 20 percent of these whose shares can be traded. The remaining 160,000 cannot trade,” he said, noting that whereas many securities central depositary accounts have been opened, majority are empty without shares.
This, he said, presented challenges, among which include low trading activity at a time when equity markets have been dampened by macroeconomic factors such as increased inflationary and currency depreciation pressures.
Therefore, Mr Bwiso said the investment forum, which comes amid celebrations to mark November 6-12 World Investor Week under the theme: Investor resilience, embracing new opportunities and harnessing disruptions, comes at the right time and will enhancing the regulatory framework to protect investors as a way of building confidence in the market and presenting suitable choices.
Regulation is an important aspect in financial markets and provides appropriate financial instruments, which are a vital foundation of growing investment activity.
Mr Bwiso also indicated that the macroeconomic environment was now more stable than last year, helping the exchange to increase its turnover from Shs38b to Shs60b, supported by a number of well performing counters, among which include Umeme, Stanbic and Baroda.
Capital Markets Authority chief executive officer Keith Kalyegira, said there is need to widen visibility of equities market, noting that companies can list even if they are not looking at raising capital.
“As the capital market grows, the companies should listen to the investors even us the regulators should listen to every voice in the market,” he said.
