Saturday, September 19, 2020

Absa Capital to list first ETF on BSE

Absa Capital, the specialised division of Barclays Bank International, is expected to float its exotic exchange traded fund (ETF), named New Gold, on the Botswana Stock Exchange (BSE) by next month, an official close to the deal said Monday.

“They have formally submitted a listing prospectus (with BSE). We have given the prospectus a greenlight,” head of Product Development at BSE, Thapelo┬á Tsheole, said.

Absa Capital is seeking a secondary listing of the productÔÇöNew Gold ÔÇô which is the world’s third largest ETF after Standard & Poor,┬á worth 1,065 tons and Euronext’s Gold Bullion Securities at 128 tons .

The New Gold has a primary listing on the Johannesburg Securities Exchange (JSE) and Botswana will have the secondary listing enabling Botswana investors to tap on  gold  unit investments on daily basis.

“Local investors will be able to hedge against the US dollar and the movement of the pula┬á currencies,” he said.

Gold is a major medium of international exchange after the US dollar and has been able to withstand the┬á┬á current world’s economic crisisÔÇöthe worst ever since World War II ÔÇô as investors who were wary of the US currency took cover by investing in the┬á yellow metal.

Further,┬á despite being┬á major developed world’s┬á central banks┬á main reserve,┬á it is also credited to┬á have out beaten┬á inflation rate on the long term.

“As the regulators of the market, we have given it a greenlight,” he added, pointing out that they are waiting for Registrar of Companies to officially register it before it starts trading.

The new developments will see local investors buying units which are equal to the value of gold and if they are in countries where laws on precious metals are not as strict as in Botswana they could easily swap their units for  any portion of gold that they have bought.

The listing of New Gold   on the ETF will open another door for other investment products, which are aimed at diversification  on the BSE and will link the exchange  and Botswana with the international community.

It will also see Botswana directly benefiting from Africa’s┬á┬á natural resources .

Under the BSE rules, ETFs  are aimed at allowing more Batswana to climb the ladder of  market investment  as they have  a low fee cost structure compared to  companies that are listed on the main board.

“The idea behind this is that since┬á Botswana is not an efficient market┬á the best thing is to┬á import liquidity into the country,” Tsheole┬á said, regarding the secondary listing of New Gold’s┬á ETF.

The New Gold has been listed on the JSE since  2004 and is largely regarded as a safe haven   during turbulent times.

Further, BSE is also in talks with Satrix Managers in a bid to lure them to list the Satrix 40ÔÇö the top 40 companies on the JSE┬á as an ETF. The move will also allow Batswana to have the flexibility of investing on a package of JSE biggest┬ácompanies.

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