Wednesday, October 4, 2023

As Botswana inaugurate new President, BSE’s DCI remains low

The Botswana Stock Exchange (BSE) is set to end the first quarter of the year on a low as major equities continue to shed value, extending the rout that began in 2016, and stoking fears that investors are weary regarding the economic and political developments in the country.

The Domestic Company Index (DCI), BSE’s benchmark index,  is down by 2.7 percent after opening the year at 8, 861.72 and closing the quarter at 8, 630.14. The first quarterly loss is greater than the 1.8 percent decline recorded in previous corresponding period. On a year to year, the DCI fell by 6.9 percent, bringing total losses to 15.3 percent over the two years since the rout began.

The downward pressure on the DCI comes as majority of the listed companies continue to see their stock value drop, despite some of them posting positive results. Leading the losses is Botswana telecommunications Corporation (BTC) which has shed off 25 percent in the last three months to trade at P1.38. Despite the plunge in the share price, BTC is still trading at 38 percent premium to its initial listing price in 2016, and the stock has joined the elite league of frequently traded stocks, coming second to Letshego.

Minergy which listed last year dropped by 15.3 percent to trade at 0.91 thebe, off from the highs of P1.05. Other losses for the quarter included Sefalana which tanked by 6.4 percent to P9.13, G4S is 6 percent lower at P3.70 and the property group Letlole la Rona is down by 4.7 percent to P2.05. First National Bank Botswana (FNBB) led the losses in the financial services sector with its share price falling by 3.9 percent to P2.25, the embattled Standard Chartered Bank Botswana lost 2.9 percent to trade at P4.95, Botswana Insurance Holdings Limited (BIHL) is down at 3 percent at P17.99, while Letshego lost 1.1 percent to end the quarter at P1.86.

Only two companies managed to register positive performances in the first quarter, with both of them coming from the tourism sector. Wilderness Safaris edged up by 4.5 percent to trade at its all 12 month high of P5.75. Chobe advanced by 5.3 percent at P9.66, making it the best performing stock under the main counter of the BSE. Choppies share price was flat at P2.42 and the stock continues to defy the negative sentiments surrounding its operations. Recently the grocer’s remuneration structure came under intense scrutiny when its employees complained about the low pay and their working conditions. Other stocks that were flat at the end of the quarter include Engen Botswana, PrimeTime and Afinitas.

While the BSE’s DCI is finishing the first quarter in the red, the index has performed well in terms of dollar returns at 0.6 percent. In the southern region, the BSE managed to outperform some of its peers, including the Johannesburg All Share Index (JSE ALSI) which is down by 5.2 percent and the Zimbabwe bourse which plunged by 10.6 percent. However, other bourses showed positive growth with Malawi All Share Index (MSE ALSI) up by 16 percent, Lusaka All Share Index surged by 5.3 percent and Namibia will close its first quarter better off at 5 percent upward.

The BSE ends the quarter as the country transitions to a new president on Sunday. The incoming president Mokgweetsi Masisi is seen by many investors as a man who can fix the country’s deteriorating economic conditions. Mr. Masisi has in the past worked closely and supported the BSE in its endeavours to get as many viable businesses listed and increase citizen participation in the capital markets. It is expected that under Masisi, policies aimed at citizen empowerment will take centre stage.


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