Absa Capital is positioning itself to list the trail-blazing multi-billion dollar exchange traded fund (ETF) on the Botswana Stock Exchange (BSE) within weeks, the bourse said Friday.
The offer for the ETF named NewGoldÔÇöthe third biggest in the world ÔÇô is expected to open for subscription offer by end of the month, making it the best year for the fledgling BSE in the recent history.
“In the coming week, we expect Absa Capital to be briefing the investment community about the ETF and the announcement of the listing date,” head of Product Development at BSE, Thapelo Tsheole, told Sunday Standard on Friday.
Unlike other products that have been coming into the market, NewGold will be an open-ended from the date of the opening of subscription.
“This will be an open ended offer and Batswana subscribers will in turn own units of gold which will be held in London on their behalf,” he said.
NewGold is the world’s third largest ETF after Standard & Poor worth 1,065 tons and 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 currencies,” he said.
Gold is a major medium of international exchange after the US dollar and has been able to withstand the 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 yellow metal.
Further, despite being major developed world’s central banks main reserve it has is also credited to have outbeaten inflation rate on the long term.
“As the regulators of the market we have given it a greenlight,” he said.
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 the Africa’s natural resources.
Under the BSE rules ETF 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 Botswana is not an efficient market the best thing is to import liquidity into the country,” Tsheole said regarding the secondary listing of New Gold’s 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 as an ETF. The move will also allow Batswana to have the flexibility of investing on the on a package of JSE biggest companies.