Saturday, September 26, 2020

DCI bounces back into positive first time this year

Local bourse rose up to the positive territory this week for the first time since the last quarter of 2008, indicating that the domestic economy might be emerging out of the downturn.

The week saw 8,774,812 shares valued at P 48.6 million exchanging hands, moving the Domestic Company Index (DCI) to 7,088.27 points or 0.75 percent above the watersÔÇöfor the first time in 10 months.

“I think there is a recovery in the market,” head of Stockbrokers Botswana, a brokerage firm, Geoffrey Bakwena, said Friday, adding that the move was spurred by the financial sector.
The financial sector, which accounts for over 70 percent of the P 27.7 billion Botswana Stock Exchange’s (BSE’s) market capitalisation, is currently enjoying the limelight, following their impressive results.

“Almost all companies are edging up and the good performance is not restricted to blue-chip companies,” he added.
Barclays Bank of Botswana, Standard Chartered and Letshego Holdings came up with a very good set of half year results in their recent reporting, while First National Bank brightened the smiles of its investors.

However, the latest developments were met with some muted response from some quarters as analysts pointed that it might be too soon to celebrate. The view from other quarters is that the good performance might be dampened by profit taking moves as the year drives towards the festive season.

“We are still cautiously optimistic about the new developments,” head of Capital Asset Management, Leutlwetse Tumelo, said.

He said one of the biggest problems, which most of the counters are facing, is that they “are still over priced”, meaning that the current rally might be short-lived.

“If you look at the figures closely, the current rally is being driven by the banks and they happen to be over priced,” he said, adding that “we might see a situation where the market starts cooling off during the December period.
Garry Juma, an analyst at Motswedi Securities, although applauding the latest development, was also wary of some profit taking measures that might take place as the festive season approaches.

“The rebound was always expected,” he said, given the optimism that was created after June.

“However, we should not rule out the fact that there might be some profit taking towards the end of the year,” he said, adding “but there will always be some long time buyers” who have just entered the market.

The foreign board remained almost flat at 0.05 percent after slight changes on Discovery Metals, A Cap Resources and African Copper.

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Sunday Standard September 27 – 3 October

Digital copy of Sunday Standard issue of September 27 - 3 October, 2020.