The value of Uganda government bonds traded on the secondary market of capital markets increased by 67.4% to 16.2 trillion shillings in the second quarter of 2022. This represents an increase from 9.7 trillion shillings in the first quarter of 2022.
The rise in the value of treasury bills in the secondary market demonstrates a large appetite for Ugandan government treasury bills by investors due to the high returns in return for their investment.
The Uganda Capital Markets Quarterly Bulletin for the second quarter indicates that the average monthly turnover also increased to 5.4 trillion shillings during the reporting period from 3.2 trillion shillings previously.
“Government bond turnover for the second quarter of 2022 was 68.8%, compared to 43.6% in the first quarter of 2022. The revenue growth can be attributed, among other things, to increased investor appetite for government securities and core trading. (PD) reforms,” the Capital Markets Authority (CMA) said in the bulletin.
On an annualized basis, CMA explained that the government bond turnover in the secondary market increased by 31.7%, from 12.3 trillion shillings in the second quarter of 2021 to 16.2 trillion shillings. during the period considered.
Going forward, the CMA said capital markets are expected to be weighed down by a reduced appetite for frontier markets driven by rising interest rates in developed markets such as the United States of America.
The CMA said frontier markets such as Uganda could be hit hard as investors, especially foreigners, are drawn to Western bonds and equities which are seen as safe havens in times of global uncertainty.
In addition, appreciation of the dollar against global currencies, including the Ugandan shilling, coupled with imported inflationary pressure in Uganda fueled by rising crude oil prices and global supply chain constraints could reduce entry into the local capital market. On a positive note, the market remains optimistic with the expected listing of Airtel Uganda and Lyca Mobile in the not so distant future.