The Botswana Stock Exchange (BSE) market performance report for the second quarter (Q2) of 2016 reveals that the local bourse is far from achieving the ideal conditions in which the contribution to turnover by the different listed companies is broad based.
Contribution to turnover by the listed companies is referred to as share turnover, which reflects the liquidity of those shares. Broad based contribution to turnover thereby suggests wide spreadliquidity of all shares traded in BSE.
Speaking at the Afena Capital press club meeting in mid 2015, BSE Chief Executive Officer Thapelo Tsheole mentioned that on average, the top five companies which comprised 20 percent of listed domestic companies contributed more than 70 percent of total turnover. The report which provides an analysis over the first half of 2016 in comparison to the corresponding period in 2015, highlights that contribution to total turnover remains slightly unchanged.
“The top 3 companies on a year-to-date basis in terms of value traded were Letshego (P500.8 million), New African Properties (P466.6 million) and Sefalana (P175.9 million). These accounted for 69.9% of total turnover generated in the first half of 2016. In the same period in 2015, the top 3 traded companies in terms of value were Letshego(P439.3 million), Sefalana (P213.1 million) and FNBB (P181.5 million) and they accounted for 55.5% of turnover,” cites the report. A previous analysis by Tsheole also reveals that Letshego, Choppies and First National Bank Botswana have proven to be bullish stocks in the bourse.
Recently the BSE recognised a historic event when New African Properties registered the largest trade ever recorded by a single company since the bourse was established. The record turnover was recorded at P457.3 million. The bourse also highlighted Sefalana and Letshego as equally significant contributors to the day’s record turnover, at P33.8 million and P1.6 million respectively.
The Q2 report goes further to analyse turnover across the different groups of investors over the first half of 2016 and the corresponding period in 2015. The investor groups include foreign companies, foreign individuals, local companies, local individuals and brokers. The bourse boasts of nine different sectors which these companies fall under. According to the report the contribution to turnover by local companies declined to 54.3 percent in Q2 2016 from 76.1 percent in Q2 2015. It however notes an improvement in the contribution of local individuals, which increased to 3.1 percent in Q2 2016 from 2.1 percent in the corresponding period in2015.
“During the period 1 January to 30 June 2016, local companies contributed 52.9% of total turnover compared to 66.0% in the corresponding period in 2015. Further, local individuals contributed 3.6% of total turnover realized during the period 1 January to 30 June 2016 compared to 2.6% in the corresponding period in 2015. Similarly, turnover attributable to local retail investors during the first half of the year increased from P39.1 million in 2015 to P58.9 million in 2016,” states the report.
In terms of comparison with other markets on the basis of domestic currencies and the US Dollar, the Q2 report shows that BSE Domestic Company Index (DCI) was outperformed by the Johannesburg Stock Exchange All Share Index (JSE ALSI). The report cites that the DCI depreciated by 4.9 percent in Pula terms but however registered a less depreciation in Dollar terms of 2.3 percent due to the Pula strengthening against the US Dollar.
“It can be noted that the returns of the SEMDEX and the JSE ALSI further benefited from the appreciation of the domestic currencies against the US Dollar as the Mauritian Rupee and the South African Rand appreciated by 1.6% and 4.9% against the US Dollar, respectively,” highlights the report.
In a bid to improve its performance and increase the contribution it makes to the economy BSE continues to engage in initiatives that bolster its effectiveness. The BSE recently amended the listing rules which came into effect on June 1st 2016. The most anticipated change due to take place is the demutualiSation of the bourse which is expected to transform it into a company that can eventually list on the Exchange. Other such activities aimed at market development include the continuous interaction of the bourse with the public on both mainstream and social media.