The project to transform the Botswana Stock Exchange (BSE) from a statutory body to a company is slowly gaining ground as the relevant bill is expected to be tabled in parliament during the current sitting. The Statutory Instrument Number 108 of 2015 has already been listed in the parliamentary notice paper for Tuesday this week.
Insiders at the finance ministry this week pointed out that the promulgation of the BSE Transition Bill will support the transformation of the local bourse. Capital markets captains also believe that the move will enable BSE to perform its functions as a profit oriented entity.
It is expected that going forward, household participation at the BSE could increase in addition to listing of private corporate securities, given the envisaged involvement in privatisation of parastatals and any increase in government securities. In 2013 the Bank of Botswana suggested in its annual report that there could be more investment by locals on the domestic bourse as the planned privatisation of government entities gather pace. The bank indicated in the same report that direct equity shareholding by the household sector through the Botswana Stock Exchange (BSE) amounted to 16.9 percent of total market capitalisation at the end of 2012. Already, privatisation is advancing with Botswana Telecommunications Corporation (BTC) and National Development Bank (NDB) at the forefront.
“Households also invest in the BSE through pension funds and unit trusts,” said the Reserve Bank, adding that the pension industry had invested a total of P17.8 billion in both equities and bonds by the end of 2012.
“Therefore, performance of the BSE or constituent corporations and issuers of securities has a significant bearing on asset holding and welfare of individuals,” said BoB.
The then BSE Deputy Chief Executive Officer, Thapelo Tsheole, previously told The Telegraph that retail participation of citizens on the local bourse was at 8.7 percent of total value of trading while that of foreigners was only 2.2 percent of total trading in 2013. Tsheole attributed that level of participation to development of investor-friendly products as well as the education campaign, which has reached the farthest corners of the country.
Meanwhile latest figures from the bourse show that its domestic board continues to fall deeper into the red as investors take profits home. So far the BSE Domestic Companies Index (DCI) has pulled losses for three consecutive weeks following what looks like a serious cash-in by investors. The BSE data indicate that the previous week, 18 million shares worth of P50.5 million exchanged hands with pan African micro lender, Letshego Limited trading a chunk of those volumes. For this past week, 12.7 million shares worth of P96.8 million exchanged hands.
