BY PORTIA NKANI
The Botswana Stock Exchange Chief Executive Officer, Thapelo Tsheole has appealed to the financial industry to innovate and list products in the stock exchange.
What comes out as a frustration to the man at the helm of the BSE is that, in the Botswana market there is lack of institutions to re-engineer products. Currently the stock exchange comes up with product initiatives and invites companies to list, which according to him is not supposed to be the case.
Tsheole who was speaking at the recent ABSA Africa Financial Markets Index launch, noted that, “in a normal set up, institutions should come up with products to list in the stock exchange, then BSE only regulate the process. It is not only in Botswana. With Mauritius it is roughly the same but they have more investment management that structure products.”
He further mentions that in Botswana, Barclays has been innovative and listed three Exchange Traded Funds (ETFs). “All the other banks are not. Banks should move towards listing ETFs than to burden households with loans.”
Often, the major challenges facing the capital markets industry not only in Botswana but the world over include: lack of marketability and information, unawareness of local investors about the listing requirements and very high fees rules amongst others.
From Non-Bank Financial Regulatory Authority, Juliana White, Director Capital Markets, also emphasized that there is shortage of investible assets in the capital markets. There are few instruments and the value offloaded is limited in comparison to the market cap. She called on the need to encourage many listings to come in the stock exchange. This she said with a sizeable debt market, “we need to capitalize on it from policy formulations. Investors complain of high cost of listing. There should be a consideration of tax incentives to encourage investors to participate on the stock exchange.”
The price movements and trading is so low, so they buy and hold on their securities.
Other market observers have indicated that in Botswana and South Africa, information is taken for granted as it is often not readily available to investors.
According to the latest BSE’s market performance report dating from January to September 2018, the ETF Board experienced increased traded value in the first three quarters of 2018 compared to the same period in 2017. The value of units traded increased in the year to date period, reaching P216.2 million compared to P133.2 million in the corresponding period in 2017 whereas the number of units traded amounted to 2.4 million units in 2018 compared to 3.2 million units in 2017.
Looking at the bond market, activity in the bond market has improved compared to the same period in 2017. The value of bonds traded during the year-to-date period was P1,608.6 million in comparison to P273.0 million traded during the same period in 2017.
Bank of Botswana (BoB), on behalf of government, held three bond auctions so far in 2018. At its first bond auction of 2018 on 2 March, additional tranches of the following were offered; BW007 (P77 million allotted), BW008 (P100 million allotted), BW011 (P100 million allotted), BW013 (not allotted) bonds and a Treasury Bill (P220 million allotted).
At its second auction of the year conducted on 1 June, these bonds were reopened; BW011 (P200 million allotted), BW012 (P200 million allotted) and BW013 (P155 million allotted).
The third Government Bond Auction conducted on 31 August saw the re-opening of the BW013 (P300 million allotted) and the issuance of two (2) new bonds; BW014 (P129 million allotted) and BW015 (P301 million allotted).
The BSE has registered five (5) corporate bond listings during the first three quarters of 2018, being the BW013 (P250 million), GBL003 (P15 million), GBL004 (P25 million), GBL005 (P5 million) and BDC003 (142.53 million).
On the back of aforementioned issuances, the nominal amount in issue of listed bonds increased to P13.8 billion compared to P12.9 billion as at the same period in 2017.
The recent launch of ABSA Africa Financial Markets Index formed as a practical tool that supports market development and, by extension, further improvement in the investment environment.