The Botswana Stock Exchange is optimistic that it will add more companies to the stock exchange following several interests from some companies to list. The last time the BSE added a new company to the stock market was in 2018, as it onboarded BancABC(now Access Bank Botswana) and SeedCo.
According to the BSE’s market report for 2022, data from EY’s Global IPO Trends 2022 Report shows that global initial public offerings (IPOs) fell by 45 percent following a record year in 2022. Under the high interest rate environment, investors reallocated their portfolios to less risky assets leading to depressed company valuations and this affected many companies prospective IPO plans, the report said. Stock markets around the world were affected in a similar manner, registering extensive declines in market returns for the year, the BSE added.
The global trend in terms of IPOs in 2022 is widely felt across the African continent. The South African public market has experienced a streak of delistings, losing 27 companies in 2022 and JSE alone experiencing 25 delistings in 2022. In 2021, 24 companies delisted from the JSE. Over the last 5 years, only 71 IPOs have been carried out in Africa. In 2021, only 8 IPOs were completed in Africa, and only 4 IPOs in 2022. Returns in African markets were similarly dampened. The FTSE ASEA Pan Africa Index ex. South African returned a negative 18.3 percent in 2022, very much in line with the tumultuous performance of global capital markets.
However, at the BSE there seems to be glimmer of hope, with at least 14 companies expressing their intention to undertake an IPO, gather guidance and have made tangible attempts in appointing advisors to assist with, and prepare for listing, the BSE said in its report.
Against this broad-based slowdown and challenging domestic environment, the BSE performed exceptionally well last year. Though the year ended with no new equity listings, additional share issuances raised P47.1 Million and P135.3 Million on the domestic and foreign board respectively. Collectively, P182.4 Million was raised on the primary equity market.
But even more notable, the BSE’s Domestic Company Index (DCI), which tracks share price performance of the 24 listed companies on the domestic counter, grew by 10.2 percent in 2022, making it the biggest growth to date since 2015.
The local stock market managed the double digit growth as management pressed ahead with its strategy to lure investors, positioning the bourse as a safe haven for their investments. It’s a remarkable growth after years of the declining benchmark index.
The DCI fell by 11.3 percent in 2016, before recovering slightly in 2017 with a 5.8 percent loss, and continued to stumble over the years with losses averaging 11 percent. In 2019, the DCI narrowed losses to 4.6 percent and while 2020 begun strongly for the BSE, it ended the challenging year with the index down by 8.2 percent. However, the DCI stunned observers as it grew by 1.9 percent in 2021, making positive gains after six years of downward spiral.
