Tuesday, December 7, 2021

Tsheole expecting new listings at the BSE continues to impress

The tough talking Botswana Stock Exchange chief executive officer Thapelo Tsheole says the domestic stock exchange market is expecting ‘strong pipeline’ of listings following several years of absence of new players going public.

During a recent panel discussion organised by the BSE, Tsheole said they are expecting new listings on the BSE, following concerted efforts by the domestic bourse to attract companies to list. The last time the BSE added a new company to the stock market was in 2018, adding BancABC and SeedCo.

As the COVID-19 pandemic wreaked havoc across the world in 2020, the global Initial Public Offerings (IPOs) shrunk by 42.7 percent due to heightened risk aversion and increased volatility.

Tsheole has been adamant that despite challenges, they have made progress with certain companies which they considered ripe to list based on the work that was done in 2020 to guide them in going public.

“While the year ended without any new equity listings, there was tremendous activity in the equity primary market, and in the fixed income market in terms of new bond listings,” Tsheole said in February during the stock exchange’s first opening bell ceremony of the year.

Additional share issuances on the BSE raised capital amounting to P103.9 million and P86.5 million on the domestic board and the foreign board respectively. New bonds issued by corporates raised P465 million while government raised a record P5.2 billion through additional tranches of existing bonds.

He said the remarkable level of activity reaffirms the importance of harnessing the power of capital markets to consistently raise capital, and credited the level of activity to BSE’s efforts in sensitizing the market and issuers on how companies can utilise the stock exchange during and post-COVID-19 pandemic.

Tsheole has also advised the government to overhaul the existing privatisation policy and privatise State Owned Enterprises through a robust privatisation plan that has clear timelines and to be implemented to promote efficiencies and promote private sector led growth. He also implored the government to overhaul the asset management industry especially pension funds, which are currently allowed by the law to invest over 60 percent of their funds offshore.

The expected new listings on the local stock market comes at a time when the BSE is riding on strong momentum as share prices bounce back from losses that have been the norm in the past six years.

From January to July 2021, the Domestic Company Index (DCI) – which tracks share price performance of the 24 listed companies on the domestic counter – depreciated by 2.5 percent compared to a 5.3 percent loss in the same period in 2020.

The DCI staged a strong performance in the second quarter of 2021 after gaining 1.4 percent, making a comeback from the 5.1 percent depreciation in the first quarter of the year.

The Domestic Company Total Return Index (DCTRI), which includes dividends in calculations, appreciated by 0.7 percent, a major reversal from the 2.3 percent reduction in the same period last year. The DCTRI ended the second quarter of 2021 up 4 percent, better than the 4.4 percent decline in the first quarter.

The resurgence in the BSE’s benchmark index will calm investors who been monitoring the decline in market capitalisation since 2015.

The DCI fell by 11.3 percent in 2016, before recovering slightly in 2017 with a 5.8 percent loss but and continued to stumble over the years, with losses averaging 11 percent. In 2019, the DCI narrowed losses to 4.6 percent and while 2020 begun strongly for the BSE, it ended the challenging year with the index down by 8.2 percent.

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