New classification raises status of Dar es Salaam Stock Exchange
Dar es Salaam Stock Exchange (DSE) chief executive officer, Mr Moremi Marwa
What you need to know:
The Dar es Salaam Stock Exchange has been reclassified, and is now among frontier markets – also known as pre-emerging equity markets – which usually draw investors seeking high, long-run return potential as well as low correlations with other markets
Dar es Salaam. Overseas investors should now be looking at Tanzania and the Dar es Salaam Stock Exchange (DSE) Plc with new zeal - thanks to an enhanced status of the country’s bourse.
DSE Plc announced in a statement last Friday that it had achieved a frontier market status classification by FTSE Russell.
Prior to that, DSE was in an unclassified market category.
The FTSE’s managing director for Governance and Policy, Christopher Woods, said in a letter to the DSE Plc chief executive officer, Mr Moremi Marwa, that the FTSE Russell Product Governance Board had approved reclassification of Tanzania to Frontier Market status effective at the September 2020 annual review of the FTSE Frontier Index Series.
Also known as a ‘pre-emerging equity markets,’ frontier markets are normally pursued by investors who seek high, long-run returns potential, as well as low correlations with other markets.
Economists define a frontier market to be a country that is more established than least developed countries - but which is still less established than the emerging markets because it is too small, carries too much inherent risk, or is too illiquid to be considered an emerging market.
“This symbolises the confidence which such a global country Classification Agent has in our market. Key to it is the enhanced confidence that will emanate from this by global portfolio investors who are keen to invest in frontier markets,” the DSE Plc’s CEO, Mr Marwa, told The Citizen at the weekend.
The classification means that DSE and its listed securities will henceforth be on the list of global investors who invest based on market classifications.
“We anticipate that this will increase the level of liquidity in our market - and, hence, motivate future Initial Public Offering and listings,” he said.
The new classification puts DSE on the same status with the stock markets in Botswana, Code d’Ivoire, Ghana, Kenya, Mauritius, Morocco, Nigeria and Tunisia.
The classification comes one year after the FTSE Russell Country Classification Advisory Committee, the FTSE Russell Policy Advisory Board, and the FTSE Russell Product Governance Board approved the addition of Tanzania to the ‘FTSE Watch List’ for possible reclassification from ‘Unclassified’ to ‘Frontier Market Status’ by September 2019.
It also comes nine months after the DSE Plc was approved as a full member of the World Federation of Exchanges (WFE).
FTSE International Limited, which trades as FTSE Russell, is a British provider of stock market indices and associated data services. It is wholly owned by the London Stock Exchange.
It operates the well-known UK FTSE 100 Index, as well as a number of other indices.
Uplifting of DSE’s status followed the FTSE country classification review process that incorporated the assessment of global markets against a range of technical criteria. And, takes account of the perceptions of institutional investors.
The DSE said in a statement that was posted on its website that, to ensure transparency and objectivity, the process was supported by the FTSE Russell external advisory committees. The Country Classification Advisory Committee - which is formed by market practitioners with technical expertise in trading, custody and investment management, as well as the Policy Advisory Board, which represents the views of leading global investors - were also included in the process.
