Tuesday, January 26, 2021

NewGold listing paves way for indigenous ETFs

After the successful secondary listing of trail-blazing gold debenture on the Botswana Stock Exchange (BSE), the local market will look to concoct its own exchange traded fund (ETF) for the future.

South Africa’s Absa Capital this week helped to successfully list the much hyped gold backed NewGold ETF after interest from investors.

This prompted the bourse to indicate that it will in the near future talk to market participants on a primary listed ETF on the local exchange.

“This does not mean all the future ETFs will be secondary listings,” Herin Mendis, Chief Executive Officer of the BSE said.

The Absa Capital NewGold ETF, which is the third largest in the world, has a primary listing on the Johannesburg Securities Exchange (JSE).

A total of 1.6 million NewGold securities were listed on the local exchange and by Monday this week its total assets under management were US$ 1.93 billion (P13.5 billion).

“We are waiting for the day; and I am calling all the market participants (brokers, retail and institutional investors) to come up with a local ETF,” added Mendis.

The idea to list ETFs was conceived some time back when the BSE reviewed its strategy and it was also mentioned by Finance minister Kenneth Matambo during his maiden budget speech.

The ETF will track gold, which is the largest and reliable hedging instrument.

The debenture, which started trading at P83, 00 tracks the Pula gold price and will be traded like any other share on the BSE.

“We have experienced a significant amount of interest from investors in Botswana for the product because NewGold gives investors access to a completely new asset class,” said Vladimir Nedeljkovic, Head of ETFs and Index Products at Absa Capital.

“It will also greatly increase liquidity on the BSE,” he added.

Gold is a major medium of international exchange after the US dollar and has been able to withstand the current world’s economic crisisÔÇöthe worst ever since World War II ÔÇô as investors who were wary of the US currency took cover by investing in the yellow metal.

Further, despite being major developed world’s central banks main reserve it has is also credited to have out beaten inflation rate on the long term.

The market wants ETFs that will be a symbol of Botswana like diamondsÔÇöthat contribute immensely to Botswana’s GDP.

It closed at P83.00 per debenture on Tuesday, with a volume of 18,225 traded for the day. The ETF will not be paying any interest or dividend, added Stockbrokers Botswana.

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