Tight liquidity persist at BSE

23 Aug 2018

The delay in the renewal of mandates to local asset managers by Botswana’s largest pension fund, BPOPF has created anxiety into the capital market, research analysts at Motswedi Securities have said.

The local stock brokering firm says the delay has since impacted negatively on the liquidity at the Botswana Stock Exchange (BSE) which has traded only P871.1 million worth of shares between January 2018 and 17 August 2018. During the same period in 2017, the local bourse traded P1.6 billion worth of shares.

Capital markets figures released at the close of business last week shows that tight liquidity conditions persisted in the local market.

According to Motswedi Securities analysts, property developer Letlole saved the day after it traded 2.1 million shares worth P3.6 million on the last trading day of the week.

Official capital markets figures shows that for the past week the local market traded 2.8 million shares worth P5.0 million with Letlole contributing the bulk of the trades.

“The last time the market traded this much volume on a single stock was on the 3rd of August 2018 when 446,103 Sefalana shares worth P3.9 million traded”

Apart from the BPOPF delay, the tight liquidity conditions over the past few weeks have been attributed to the general decline in investor sentiments especially on emerging markets. The recovery of the US economy which has seen the Fed increasing interest rates coupled with the trade war currently between the US and China has prompted investors to prefer safer markets in the developed world at the expense of emerging markets.

Meanwhile the Domestic Companies Index (DCI) lost 0.09% to extend its

ytd losses to 6.36% while the FCI was static in the absence of any trades on the Foreign Equity Main Board.