Tuesday, September 29, 2020

Domestic board breaks nearly a year of bear market

The Botswana Stock Exchange (BSE) domestic board re-bounded for the first time in nearly twelve months, cutting bear market streak that has dominated the market since July last year, Capital Securities said in its research note last week.

According to the report, domestic board saw a significant rally in four weeks ending June 27ÔÇö 3.5 percent higherÔÇö closing the month at 7175.24 points.
The brokerage firm said “there are clear indications that the market is turning around” as capitalization of the board rose to P27,939 million against P 27.3 million from a month ago- and down P 37.4 million against 52 weeks ago.
The domestic company index (DCI) was recording its first four weekly gain ever since July last year that was powered by bullish run that was spear-headed by both blue chip stocks and mid-cap counters.

The report notes that the large caps put on 1.9 percent while the mid caps saw a giant leap forward of 4.9 percent to drive an overall 2.4 percent increase in market cap. Of the 20 domestic stocks, 17 traded over the period; seven closed heavier of which three were large cap financials and market leaders. At the close, the domestic board was trading at a weighted average price earning ratio of 12.8 times.

The domestic board has been faced with numerous difficulties ÔÇô trade related and dented perception within heavy weight counters, particularly financial stocks. Financial stocks account for around 90 percent of the main board weight and are so far largely capitalized. In recent past, the financial stocks were affected by negative publicity, which saw their share prices taking a dip as investors migrated their money to mid cap tiers.
“There is a degree of optimism creeping into the market,” the brief quoted Leutlwetse Tumelo, the head of the newly created Capital Asset Management’s division.

He added that the market is poised for come back, as signaled by Standard Chartered bounce of 7.9 percent on the back of a 10.2 percent gain that was achieved in the month of May. Barclays also traded up, albeit benignly, but is somewhat a different trade compared to its trend of two months ago. The counter was up 1.9 percent in the month under review as was brewery stock of Sechaba.
Among the mid caps, Imara led the rally with a whopping 36.8 percent gain; Prime Time Property Holdings added 6.7 percent while African Banking Holdings and Engen saw a gain of 5.3 percent and 2 percent, respectively.

“I think it’s time to come in, it would be ridiculous to see prices drop below the current levels,” concluded Tumelo.
Overall trade on the domestic board over the period under review was 8,973,865 shares, or 0.44 percent of the free float on the market, which is approximately 37 percent of the total capitalization of all shares in issue.

“This was well down on the previous four weeks’ 29,688,811 shares (1.45 percent of the float),” says the brief. Trade was also down in most of the mid caps, falling from 16.9 million shares to 1.9 million shares. Large caps traded 5.5 million shares against 12.8 million over the previous four weeks. Overall, trade of the past 52 weeks has been 133,266,330 shares or 6.50 percent of the float.

The mining stocks represented P 18.840 million at the June 27 close sagging 4.4 percent over the four week period but stood 10 percent down while measured on year-on-year basis.

The stocks traded 604,097 shares or 0.05 percent of shares on issue against 1,582,988 shares during the month preceding June and traded 12,388 291 shares during the same time last year.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.