SHILLING APPRECIATES 9% AGAINST THE POUND AFTER BREXIT

The shilling has appreciated over 9.0 per cent against British pound since the United Kingdom voted to exit from European Union. The shilling gain has pushed down Dar es Salaam Stock Exchange (DSE) market capitalisation as well by slightly over 1.0 per cent in the same period.

According to Bank of Tanzania (BoT) forex data, it climbed up from 3,264/59 of last Friday to 2,955/43 of yesterday, thus making imports from UK relative cheap by 9.0 per cent. DSE Chief Executive Officer Moremi Marwa said the Brexit may have negative impact on the bourse based on Acacia Mining share price movement and market capitalisation. Acacia Mining shares are quoted in Pound in the London Stock Exchange (LSE) and are converted into shillings in the Dar bourse.

“The impact on the pound is not necessary on portfolio investments but on FDIs (Foreign Direct Investments) inflows. “However, pound depreciation is good for investors as listed share on London exchanges are going to be relatively cheap if you buy from outside,” Mr Marwa said.

Trading data from London’s Financial Times Stock Exchange (FTSE) showed that Acacia Mining share appreciated by 29.91 per cent in a week time to 454.00p at 13:08 hours yesterday.

While on DSE, the largest mining firm in the country, share closed at 13,360/- of yesterday compared to 10,460/- of last Friday, reflecting a gain of 27.72 per cent in just five days.

The Acacia share gain has minimised the negative effect of the shilling appreciation against the pound sterling on DSE market cap that slide by merely 1.0 per cent in five days. The firm has cross-listed to DSE from FTSE.

The gold firm, London listed miner, share price on DSE are calculated based on the exchange rate of the day. The recently gain reflects dropping value of British pound against shilling.

Mr Marwa, however, said “we are learning as we go. We will continue to see how it will impact the country and global markets in near future.” Zan Securities CEO Raphael Masumbuko said he sees a positive impact on the UK voting out of EU and one of the good effects was on the price movement of Acacia Mining shares.

“The effect, however, will be insignificant to the bourse ... not that much,” Mr Masumbuko told the ‘Daily News’ yesterday.

Acacia was one of the main market movers yesterday to enable DSE all share Index to walk north to appreciate by 40.12 points to close at 2,469.59 points.

FTSE’s Broker Tip indicates that Acacia Mining’s shares rose as Credit Suisse (CS) raised its target price to 380p from 300p and reiterated an ‘outperform’ rating on the stock. CS said Acacia is trading at a low multiple and a discount to the broker’s net present value.

Daily News