Saturday, September 19, 2020

BSE balloons to P37

The Botswana Stock Exchange (BSE) leaped to another league over the last second quarter owing to First National Bank and Standard.

“The performance in the last quarter was very, very impressive; the Domestic Index went up to 9609.15 to P37 billion while all share index stood at 2363.29.
Analysts said the recent surge was largely driven by retail consumer demands as opposed to institutional demands.

The basic reason has all been about valuation.

However, Imara Holdings rose from 173 percent over the last quarter period to the biggest rising start ahead of Letshego Holding.

“Imara was very cheap to begin with and it released some very impressive reporting,” Alphonse Ndzige of Investec said Friday.

Looking closely, Standard Chartered Bank of Botswana was trading at Price Earning of an average of 30 times against its peers in the market.

The banking sector stock appetite was Bank of Botswana Certificate (BOBC’s) linked, which was also driven by a lot of cash in the market, but liquidity was tight over the period.

“I do not expect the current Bull Run can not be sustainable primarily because of valuation. The stocks have been over bought and they are now being driven by retail instead of institutional investors,” Ndzinge said.

However, Capital Securities insisted that the prices are likely to move, given their current valuations.

“There has been a move in the case of Barclays which has been subjected to profit takings, although it is trading at 33 times against its peer, Standard Chartered, at 41 times. That has created P 37 billion since its establishment in the mid-19990s.

“These are not institutional buyers driving the market, but rather the retail investors who do not care about valuations,” one observer said.

This comes when Standard Chartered is trading at P 29 per share while FNBB traded over 5 million shares since records began in this country.

Going forward, the mood is quite mooted across financial institutions in the country except for Letshego which has established itself as a national brand.

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