Tanzania: Why December is best for share buying

Dar es Salaam. December turns out to be the best month to buy shares at the Dar es Salaam Stock Exchange (DSE) as there is increased supply of the same, hence, lowering the prices.

This is according to market analysts who argue that it is in this month that a number of individuals and corporate entities tend to sell their shares so as to meet end of the year financial obligations like school fees and taxes.

Currently, offers are in domination of the market compared to demand, that is, sales exceed demands thus pushing prices down.

DSE’s chief executive Officer Moremi Marwa told The Citizen on Wednesday that supply from individual shareholders was mostly driven by meeting personal ends.

“They offer at low prices in order to meet their financial obligations including affording basic holiday requirements, rent and the pressure of school fees in January,” he told The Citizen.

As for corporate entities, they mostly tend to accept slightly lower prices in order to collect cash for clearing their tax obligations.

Mr Marwa said: “The liquidity of some corporate entities may not be sufficient to cover for annual tax disbursements, so releasing many shares at a low price may bring in revenue to cover the required expense”.

Orbit Securities’ operations director Juventus Simon said they have observed the pattern repeating almost every year, with share prices going down between November and January before starting to rise again.

“There are many individual expenses during this time of the year. This happens to corporate entities as well, for many it is time to close the books and realise what they gained during the entire year,” he said.

Mr Simon said experience showed that the situation usually started normalising around February when the festive season is over.