Umeme starts 2023 strong, makes investors 9% wealthier

In 2012, about 622,378,000 shares were offered at Shs171.1 billion which boosted Umeme's value on Uganda Securities Exchange (USE) up to Shs186.7 billion.

However, the increase in value comes at a time when listed equity markets are struggling under a challenging operating environment. Internally, Umeme is also struggling with negative sentiments from the pending buyout and delisting from USE and Nairobi Securities Exchange (NSE).

Moreover, according to African Exchanges, Umeme is the second most traded stock on USE in the past three months (October 24, 2022 - January 27, 2023).

“We are getting many inquiries from investors but the challenge is others are holding onto the shares causing a supply gap,” said Salma Nakiboneka, an investment manager SBG Securities, a subsidiary of Standard Bank Group.

Simon Mwebaze, the general manager at UAP-Old Mutual Financial Services Uganda Limited, told Daily Monitor that Umeme is currently unable to invest due to legal constraints which means its sitting on a lot of cash.

Despite the strong start, things are not looking good for equities markets. According to Fidelity International’s 2023 outlook, inflation and interest rates ae still a threat to performance with a small window of investment-friendly ventures.

“We expect a high degree of volatility and uncertainty for global equities in 2023, as stubbornly high inflation and interest rate rises lead to a rough landing for large parts of the global economy. However, earnings expectations are diverging across different economies, allowing investors to capitalise on selected opportunities,” according to Fidelity.