Local investors will from this week closely watch the capital markets as the hectic reporting period for most of the domestic counters especially in the financial industry begins. The period is expected to show the impact of the numerous reductions of interest rates by the central bank since last year.
Since the beginning of 2013, the Bank of Botswana (BOB) Monetary Policy Committee (MPC) cut its rate four times by 50 basis points (0.50%) each time in May, June, August and lately in mid this month. Overall, this reduced the Bank rate to 7.5 percent from 9.5 percent since the previous rate cut in December 2010.
However figures from the national stock exchange show that the trading week that ended on Friday equities of most of the listed banks were still very active. The Botswana Stock Exchange weekly reports shows that the stocks of the four listed banks contributed hugely to about 87 percent of the domestic counters participation reflecting more appetite just ahead of the reporting season.
By the end of business on Friday, the Domestic Companies Index (DCI) looked set to continue with its bull run as it crossed the 9300 level gaining over 3 percent in less than a month period. The BSE registered the highest turnover ever recorded in any quarter since inception amounting to P742.1 million in Quarter 4 of 2013.
The BSE data shows that by Friday shares of ABCH, trading as BancABC leaped up by 9thebe to trade at 511thebe while FNBB pocketed 10thebe to trade at a new 12 month high.
Barclays which has been struggling since last year continued with its downtrend as it lost 10thebe to close the week at a 52 week low of 535thebe. The appointment of a new manager director is yet to bring any positive impact on the share price of its stocks. Stanchart stock did not move but rather stood at 1175, which is the highest price it has reached on the last 12 months.
Meanwhile it is also yet to be seen how the recent directive issued by the Bank of Botswana prohibiting any increase in bank charges over the next two years will impact on earnings growth for the whole banking sector.
According to Garry Juma, a financial researcher at Motswedi Stock Brokers, “FNBB has been the only bank which was able to match its non interest expense with non interest income”.
Standard Chartered Bank bank’s Head of Consumer Banking, Duncan Wood told The Telegraph’s sister publication, Sunday Standard last week that, “This will not have any impact for us since we have not planned for any increase in fees and charges during the year. Also the process of seeking the approval of the Central Bank before any change in charges has been in existence for a long time.”