Monday, July 22, 2024

BSE starts year on a higher note

Financial stocks breathed life into Botswana Stock Exchange (BSE) for the second week in a row since the beginning of the year, bolstering punters’ sentiments that the economy is in an upturn gear from the recession.

By Friday close, the Domestic Company Index surged 2.16 percent to 6610.16 points from last weekÔÇöpushing year to date to 3.08 percent ÔÇô while the Foreign Company Index was flat at 4.19 percent or 1744.09 points.

The move is buoyed by the expectation that the economy will grow by about 7 percent this year largely driven by the recovery in the international diamond market.

“The people believe that this is the right time to buy,” head of Stockbrokers Botswana, Geoffrey Bakwena, said, adding that “although the outlook on the exchange is not very, very bright”.

“The market is confident that things will improve and cannot get worse than this,” he said.
BSE tumbled 11 percent last year as it got the negative effects of the worst economic recession since the Great War.

The latest are supported by the major drivers of the domestic bourse being the financial sector which is about to parade their set of results starting from March this year.

ABC Holdings, Barclays Bank of Botswana, Botswana Insurance Holdings Limited, First National Bank of Botswana and Letshego Holdings are expected to report either full year or unaudited results starting from March.

“Well, we are expecting improved market conditions which are much better than in 2010,” an analysts at Motswedi Securities, Garry Juma, said, adding that last year the market was under pressure that was made worse by profit taking during the month of November and December.

Leutlwetse Tumelo, head of Capital Securities, said a knock on the bourse was inevitable since most stocks were trading on high valuations.

“Most stock were trading on high valuation hence correction was inevitable,” he said, referring to a plunge in stock prices as investors embarked on profit takings.

“Prices are beginning to pull up and I am confident that 2011 will be a much better year,” he added.
Although there are some strong sentiments of recovery in the general economy, analysts are cautiously optimistic about the BSE’s re-bounce to its historic performance of 15 percent per annum.
“We are likely to end the year flat or at best at around five percent increment. I do not think we will get to the historical highs of 15 percent,” Bakwena said.

“The move will be buoyed by the diamond sector,” he said, adding that Botswana will not benefit much from the major move taken by India to pump money into the diamond industry.


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