An analysis of trading volume of the Uganda securities exchange

Abstract

This study aimed to analyze the trading volume of the Uganda Securities Exchange. The study adopted a survey-based approach to collect data from 300 participants selected from the investors, brokers and financial advisors on the USE using a simple random sampling design. The data was collected using a self-administered research instrument, and data quality was ensured by establishing the internal consistency of the research instrument that resulted in an overall Cronbach's reliability coefficient of 0.784. The data was analyzed using descriptive statistics measures of central tendency and variability. The study results revealed that: there are high fluctuations in the trading volume of the USE. Furthermore, the study results showed that the major causes of the fluctuations in the trading volume on the USE are; speculative investing, exchange rate fluctuations , interest rate fluctuations , volatility in stock returns, price changes. The study identified the following policy frameworks to minimize the fluctuations of trading volume on the USE; the Capital Markets Authority should relax some of the requirements to list on the Uganda Securities Exchange to allow Small and Medium Enterprises to list, there should also be daily dissemination of information concerning listed companies both inside and outside the companies’ home market, the USE should fully automate their operations, the revenue authority should revisit the tax treatment on income earned from investment in listed companies, the USE should establish an over the counter facility which makes trading more convenient and accessible, the Uganda Securities Exchange should consider licensing banks which have a wide branch network all around the country to act as their agents.