Tuesday, September 29, 2020

Investor move on BSE for profit taking

Retail investors dumped the banking sector shares on the Botswana Stock Exchange (BSE), Tuesday in a profit taking exercise that sent the Botswana Domestic Companies Index (DCI), 0.10 percent in the red, continuing the losses of the market since the effects of the credit crunch were felt by the country.

The main losers were Standard Chartered Bank of Botswana which was off 5 thebe per share to 1,785 thebe and First National Bank of Botswana that eased 1 thebe per share to 223 thebe.

They left the DCI at 0.10 percent lower to 6,752.33 points, or 4.02 percent, in the negative on yearÔÇôto-date. The Foreign Companies Index lost 0.01 percent to 1,168.53 points.

Analysts were divided on the direction of the market while others were still adamant┬áTuesday that next month may provide a turning point on the BSE’s direction as most of the ┬áblue chip ÔÇö mostly the banking sector ÔÇö will be due for half and full year┬áfinancial reporting.

“Most of the people (mostly retail investors) who are selling are those who bought their shares before September when the prices were high. And now, they are realizing that they are taking a knock and are selling,” head of Stockbrokers Botswana, Geoffrey Bakwena, said.

He added: “I hope the situation will change next month as the banking sector will be┬áreleasing their results.”
The banking sector represents about 70 percent of the BSE capitalization and it is likely to trigger a re-rate if its results are good. The sector is known to be liquid, robust and the most profitable in the equity market.

┬áHowever, Chief Executive of Capital Assets Management, Leutwetse Tumelo,┬ásaid the┬áshare┬ádownward spiral is being driven by a number of factors ÔÇö including the combination of institutional and retail investors┬áwho are feeling the impact of the global economic recession and are suspicious of the earnings for this year.

“The thing is that there is a lot of share overhang and some investors do not think the earnings for this year will be as good as they used to be. The basics of it all are that the global recession is becoming real and not something that they hear about in the news,” he said.

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The Telegraph September 30

Digital edition of The Telegraph, September 30, 2020.