Sunday, November 29, 2020

BSE record turnover was not good enough

Though the Botswana Stock Exchange (BSE) made news with its record turnover generated in a single day in 2016, it failed on the other hand to maintain stability of turnover contributed by companies over that year. This is according to the BSE annual report released last week.

The report cites that turnover was relatively unstable in 2016 in comparison to the other years. “Turnover distribution was the least evenly distributed in 2016 in comparison to recent years,” says the report. The explanation offered on the instability is that before and after the bourse registered the highest amount of turnover ever recorded, amounting to P494.3 million, in a single day it had not traded near such levels on any day. A quarterly analysis showed that this highest turnover was generated in the second quarter of the year. The closest amount to the record turnover was P107.2 million in June of the same year. This, the exchange says, is the reason for the significant variation in turnover which by extension depicts instability. The average daily turnover observed in 2016 was P10.2 million compared to P12.2 million per day in 2015. By the end of 2016 BSE had registered a turnover of P2.5 billion which in comparison to the previous year is less than was generated at P3 billion.

Moreover, the volume of shares traded in 2016 was also lower than in the past year. Despite that the bourse experienced two instances relating to a significant spike of shares that exchanged hands in 2016, the two events did not do enough to ramp up the volume of shares traded. The volume of shares traded in 2016 was 778.2 million in comparison to 803.1 million shares in 2015, the report indicated. . “The decline in trading activity could be partly attributable to the adjustment of the brokerage commission structure in April 2016 that introduced a floor of 0.60% on commission charged by Brokers. The BSE will continue to observe the extent to which the change in brokerage commission will affect trading activity going forward, but is thus far of the view that this is not a prominent factor,” says the report.

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Sunday Standard November 29 – 5 December

Digital copy of Sunday Standard issue of November 29 - 5 December, 2020.