Tuesday, November 30, 2021

Banks pull BSE up but dual listed companies go south

The Botswana Stock Exchange (BSE) closed the month of July on a buoyant mood as it climbed 3.1 percent supported by the banking sector, which is expected to release a string of results starting from this month.

“This is on top of the 3.5 percent gain over June, both largely on the back of the banking stocking stocks, which have added confidence to growing belief that the bourse has at last bottomed,” head of Capital Asset Management, Leutlwetse Tumelo, said in his monthly research.
At the beginning of August 1, BSE stood at 7411.9 points, up 3.1 percent or netting P 28.9 million on the day, however, it was lower than the same period last year when shares valued at P 37.9 million were noted.
“These signs are good, domestic prices are moving up, more stocks are trading regularly,” he added.

He said what gave the market steam was the net gain made by the four biggest companies on the exchange which are all the banks. That has seen Barclays Bank of Botswana moving up 12.5 percent while Standard Chartered, which is the third biggest on the exchange, was 3.9 while Botswana Insurance Holding Limited added 4.8 percent during the month.

The financial services sector is the backbone of the local bourse, accounting for over 70 percent of the market capitalisation.

However, First National Bank of Botswana was down 2.1 percent on the month while Sechaba Holdings, which is being troubled by planned alcohol price increase, closed the month flat.

But five of the mid cap companies aided the market although the overall sector contributed only 0.1 percent over the period under consideration. African Banking CorporationÔÇöwhich is due to have its Special AGM sometime this monthÔÇöwhich will put it on the African ivy league, Chobe Holdings , Prime Time, Sefcash and Turnstar Holdings. The counter was negatively affected by the performance of Imara, which slouched ÔÇôdown by 3.8 percentÔÇöliterally wiping its gains ÔÇö- and followed by Engen, FurnMart and G4S and their boards were trading at price earning ratio of 13.1 times.

Given the situation, trade during the period represented about 8.7 million shares or 0.42 percent of the total float, representing 37 percent of the total shares of the total capitalization of shares on issue.

The foreign company indexÔÇöa measure of dually listed companies index the picture was totally different owning to the global stock turmoil that started last year with three problems; the global crude oil prices, the mortgage crisis in the United States of America and the softening of the USA dollar against its major trading partners. The move has painted ugly situation across the globe as the USA has been long regarded as the safest investment place and the US dollar as the international currency while it consumes a lot more fuel than any other nation.

The softening of the US dollar has seen other mavericks, such as Martin RapopportÔÇöan expert on the diamond industry – calling for a new international currency to replace the US dollar as the cutting and polishing industry was being buried under debt.
“The picture there is totally different,” Tumelo said.
“The stocks reflected what is happening in the primary markets, which I believe will remain under pressure for the rest of the year,” he added.

Further, the situation was not helped by the regional power outages which have pushed the input costs of the giant mining companies up and forcing them to delay some of the projects like AK6 where they do have a venture arrangement with African Diamonds Plc. Uncertainty around CIC Energy has suppressed the stock by 37 percent, leading to the whole mining stocks losing about P 15.8 million during the month.

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