Absa Capital said it was hopeful the new NewPlat ETF that debuted on the Botswana Stock Exchange on Friday will follow in the glory of the gold backed exchange traded fund, which has been trading on the local exchange since 2010.
The BSE welcomed another ETF that tracks the performance of the platinum bullion which has been a success on the JSE.
Head African Markets at Barclays Africa/ Absa Capital, Mike Christelis said he was pretty sure the new product will follow in the footsteps of NewGold. “We hope that this new fund will become a similar success in this market as its older cousin- the NewGold ETF,” he said at BSE listing of the fund.
“This will be the first product offering (that gives) Botswana’s institutional and retail investors alike an opportunity to get exposure to the performance of platinum bullion, in Pula, (and) in a simple convenient way through a security listed on the Botswana Stock Exchange,” he added.
NewPlat ETF follows NewGold ETF, which was the first South African’s ETF to be listed outside the country.
After the BSE listing, NewGold was introduced to the markets in Nigeria, Ghana and Mauritius and has US$ 1.7 billion (about P15 billion) assets under management. The NewGold ETF traded 16,937 units with a value of P1, 905,843 at prices ranging between P103.70 and P116.80 per unit in the second
quarter of 2014.
Reports in South Africa have indicated that NewPlat has outperformed the gold-backed ETF NewGold, listed by Absa Capital on the JSE about 10 years ago, despite the 11-week wage strike in the platinum belt.
“It has done well and at some stage it was the biggest ETF in the world,” added Christelis.
Currently, there are 2.25 million NewGold securities listed on the BSE with US$28 million (about P250 million) worth of investment. Gold has been used as a safe heave for many years while platinum has always been seen as trade tool.
Each platinum is fully backed by physical platinum- approximately equivalent to 1/ 100th troy ounce of platinum bullion. The sponsors currently hold 36 tonnes of platinum to back the security and the platinum underlying the NewPlat ETF is of South African origin and is stored in the London/ Zurich Good Delivery Form.
South Africa together with Russia are the world largest producers of platinum ÔÇô although the two BRICS countries have been dogged by industrial strikes and geo-political challenges respectively. Anglo American Platinum Limited (Amplats), Impala Platinum’s (Implats), Lonmin Plc and MMC Norilsk Nickel are well known platinum producers.
Held by NewGold’s custodian, Barclays, in a secure depository on behalf of investors, the platinum is fully insured allocated and cannot be lent out.
ETFs hold assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. An ETF may be attractive as investments because of their low costs, tax efficiency, and stock-like features, according to Wikipedia.
“In the long to medium term, prospects for platinum are perceived to be better than gold because the global economy is recovering,” Vladimir Nedeljkovic, Head of ETFs and Index Products at Absa Capital said as reported Business Report in the past.