Josephine Christopher is a senior business journalist for The Citizen and Mwananchi newspapers
Mwananchi Communications Limitted
Dar es Salaam. Tanzania’s equity market experienced a notable pullback in foreign investor interest in the third quarter of 2025, with offshore investors increasing their stock sales by 41.9 percent, as global yields rose and the US Federal Reserve maintained elevated interest rates.
Market data shows turnover from shares sold by foreign investors rose to Sh114.9 billion in the third quarter, July to September 2025, from Sh80.9 billion that they sold in the second quarter, between April to June 2025.
According to the Dar es Salaam Stock Exchange (DSE), the surge in foreign selling reflects both global monetary tightening and domestic portfolio adjustments rather than a loss of confidence in the market.
DSE’s chief executive officer, Mr Peter Nalitolela, said the rise in foreign selling signals reduced foreign participation and potential portfolio rebalancing.
“It reflects a combination of domestic market dynamics, macroeconomic adjustment, and global yield dynamics rather than a loss of confidence in the Tanzania Market,” he said.
The American Federal Reserve in September reiterated its “higher-for-longer” stance, holding its benchmark rate near a two-decade high. The yield on 10-year US Treasuries hovered around 4.6 percent, the highest since 2007, prompting global funds to rebalance toward dollar assets.
Meanwhile, the local shilling has remained relatively stable against the dollar, supported by healthy foreign-exchange reserves,
By September 30, 2025, total market capitalization stood at Sh21.34 trillion, an increase of 20.9 percent from Sh17.6 trillion in September 2024, buoyed by banking and manufacturing earnings.
Domestic market capitalisation also closed the third quarter at a higher note at Sh13.6 trillion, 11.1 percent year-on-year from Sh12.2 trillion, indicating local absorption of foreign liquidity gaps.
The All Share Index (DSEI) gained 17.8 percent to 2,489.70 points from 2,114.34 points a year earlier. The Tanzania Share Index (TSI), tracking domestic counters, climbed 11.2 percent to 5,118.8 points from 4,604.09 points in September 2024.
Domestic participation has risen sharply, cushioning the blow from foreign exits. Pension funds, insurance companies, and retail investors now account for the majority of trading activity at the DSE, providing liquidity and supporting valuations.
According to DSE data, local trading volume accounted for nearly 85 percent of turnover in Q3 2025, up from about 60 percent in the same period last year.
The Banks, Finance & Investment Index saw the sharpest monthly decline — tumbling 7.5 percent to 9,245.90 points in September from 9,994.54 points in August, as investors booked profits after a strong first half and liquidity tightened.
Yet the sector remains the year’s outperformer, up 63 percent from 5,674.20 points in September 2024.
The Industrial & Allied Index decreased slightly, by 2 percent, from 4,213.43 points in August to 4,136.25 points in September. Meanwhile, the Commercial Services Index eased to 1,644.39 points from 1,666.41 points, a 1.3 percent fall, and a steep 23 percent drop from 2,138.48 points a year earlier — highlighting the continued weakness in consumer-driven stocks amid inflationary pressure.
Bond market
The fixed-income sector thrived despite equity wobbles. Outstanding government bonds rose 19.1 percent to Sh28.6 trillion from Sh23.9 trillion in September 2024, and 2.5 percent from Sh27.9 trillion in August, as investors sought stable yields.
Corporate bonds held steady at Sh176.2 billion, up 198.4 percent from Sh59.1 billion a year earlier, signaling private-sector issuance growth.
Register to begin your journey to our premium contentSubscribe for full access to premium content
