The sell off on global stock markets reverberated on the local market with the Domestic Companies Index (DCI) five week winning streak coming to a halt as investors shifted into risk averse mode on fears that the world economy was witnessing another recession. Global stock markets finished the week in the red with the Dow Jones losing its remaining gains for 2011 during the week on growing fears about the weakening U.S. economy and continuing debt problems in some European countries such as Greece, Spain and Italy. There were also signs of market correction and profit taking following the market five successive weekly gains, resulting in the DCI losing 0.54 percent to close the week at 7,150.13 points.
BoB maintains bank rate steady
Bank of Botswana has maintained the standard bank rate at 9.5 percent in line with its neutral monetary policy aimed at supporting economic activity through a lower interest rate regime.┬á The decision was taken this week, after slashing rates by 550 bp to support the recession-battered economic activity in 2009. With South Africa being Botswana’s top trading partner that constitutes about 90 percent and 80 percent of fuel and food imports respectively, imported inflation stands as a major obstacle to the central bank’s objective. The level of output in the 12 months to March 2011 is estimated to be 6.4 percent higher than in the same period in 2010, thus reflecting the 7.2 percent growth in mining output and the 6.1 percent increase for the non-mining sectors. Given the circumstances, the interest rate policy pursued since 2010 continues to be supportive of economic activity and will contribute to a narrowing of the output gap in the midterm.
Sefalana bottom like weaker
Although the group recorded a slight increase in head line earnings, the group’s bottom line was weaker than the previous year following disappointing performances from most of the group’s subsidies such as Foods Botswana, KSI Holdings and MF Holdings. The group’s cash and Carry division had a good year, with revenue increasing by 11 percent mainly through addition of more retail stores and increased trading at stores opened during the previous financial year. The group’s total revenue increased by 11.2 percent to P1.9bn (FY10: P1.7bn) mainly driven by performances from cash and carry division. Administrative expenses were 7percent higher at P74.2mn (FY10:P69.2mn) on the back of cost incurred by the group on opening new Shoppers shops across the country as well as refurbishment of existing ones.
NewGold ETF continues to impress
BettaBeta ETF erased 1,7 percent to 3,127 thebe per debenture unit, its lowest since listing after trading 720 units worth P22,917. Meanwhile NewGold ETF continue with the recent impressive form, ending the week at another new 52 week high of 10,665 thebe on 75,116 units worth P8,010,937.
NewGold EFT is tracking soaring gold prices on the international markets, supported by rising concerns about the global economic recovery.
Transport ministry to brief media on projects
The Ministry of Transport and Communications will brief the media on the Integrated Transport Policy on the 12th August 2011 at 1000hrs at the Ministry Headquarters, Westgate Mall along the Western by-pass. The Draft Integrated Transport Policy aims to integrate the operations of the road, rail, passenger transport, freight and logistics, aviation, marine, riverine sectors in order to enhance efficiency of the transport system in Botswana. This will enable relevant players to plan, manage and provide critical infrastructure for the transport sector.
Pay raises end De Beers mine strike
Some 1,300 striking mine workers in South Africa will return to work tomorrow after their union and De Beers reached an agreement on wage increases on Thursday. De Beers Consolidated Mines Agreed to increase the minimum wage to about $870 a month as well as raise wages by 8-10 percent, bringing an end to the two week strike. The National Union of Mineworkers (NUM) demanded a 15 percent pay hike, while De Beers offered half of that, on the eve of the strike. De Beers Chief Commercial Officer Bruce Cleaver told IDEX Online that the DBCM kept producing during the strike. “Not all the workers are striking and we have strategic stockpiles that we are going through now,” he said.
(African Alliance/ Motswedi Securities/ Idexonline)