Tuesday, April 7, 2020

DCI up, but Lucara loses its lustre

It was a bag of mixed fortunes for Botswana Stock Exchange (BSE) listed companies during the early trades of the first month of the year.

The domestic company index (DCI) continued its rally and firm favourite Lucara lost almost half of its share value.

The DCI, which tracks share price performance of the 23 listed companies on the domestic counter, closed the third week of January at 7,519.07 points, up by 0.3 percent from end of December’s closing level.

The slight positive momentum builds on a rally that took hold in 2019, as the DCI narrowed losses to 4.6 percent, an impressive recovery from the 11.4 percent loss in returns recorded last year, signalling that the local stock market rout that began in 2016 might be coming to an end.

Last week’s upswing in the index was surprisingly led by positive gains from the country’s biggest microlender, Letshego Holdings, which was last year’s worst performing stock after losing more than half of its share price value. Letshego’s share price in the past three weeks surged 7 percent to trade at P0.76, with some positive sentiments emerging from the recent appointment of the substantive chief executive officer.

Chobe, the hospitality and leisure group, gained 0.9 percent to trade at P11.20 per share. The upward momentum was also supported by a 0.6 percent share price jump in Sefalana Holdings Company, with the retailer expected to post stellar results in few months. The real estate listed New African Properties, is up 0.3 percent to trade at P3.25 a share. Other listed companies on the domestic counter remained flat, with no changes in share price.

The foreign company index (FCI), which tracks companies listed on BSE that also have listing in other stock exchanges, shed 0.7 percent to close at 1551.55 points. The index made up of five foreign based companies on the main board, and three others on the venture capital board, is usually resilient compared to the DCI.

However, in the second week of January trades, the rising star in the mining industry, Lucara Corporation, was the biggest loser as the share price plunged to P6.60, down by 49.9 percent. The Canadian miner owns the prolific Karowe mine, which is the company’s main asset.

The Boteti based mine came to stardom for unearthing high value diamonds which include the 1,109 carat Lesedi La Rona, the 813 carat Constellation and last year’s sensation, the 1,758 carat Sewelô, which is the largest ever diamond to be recovered in Botswana.

In an unusual move, Lucara disclosed on Wednesday that it has entered in an unprecedented collaboration with luxury retail behemoth Louis Vuitton, and the cutting-edge manufacturer HB Company, bringing the trio together to cut, polish and dispose of the Sewelô. The move was unexpected as the norm is a diamond that size, deemed the second largest in the world, is usually disposed through auctions or placed in a private sale to diamond collectors.

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