- Contribution to capital markets may be expected to increase in the long term
- BSE intends to transform the landscape
As with 2020 and 2021, analysts at Imara Capital worry that the retail market participation is expected to remain subdued on account of incoming upwards adjustments of administered prices, elevated inflation in the current year and government’s decision to withhold salary increments in the current year.
In the long term however, Imara analysts say local individuals’ contribution to capital markets may be expected to increase. This is against the background of the BSE’s intention to transform the landscape, introducing new products and services, enabling easier access to the market and bettering education levels about the local stock market through the new CSD system, ATS and stock market simulator, which are to be launched in 2022.
Botswana’s retail market participation continued its downward trend in where it declined drastically by 32.72 percent in 2021 to P44.5 million (FY 20: P66.2 million). This was subsequent to a 63.00 percent decline in the prior year. Local individuals’ contribution to total turnover from 2020 to 2021 decreased by 700 bps to 2.5 percent. According to a market report by the BSE, local companies contributed 74.8 percent to total equity turnover or P85.2 million in monetary terms while local individuals contributed 7.3 percent (or P8.3 million in monetary terms) in January. Foreign companies contributed 17.1 percent or P19.5 million to total equity turnover while foreign individuals and brokers contributed 0.8 percent (P0.9 million) and 0.0 percent (P0.008 million) to equity turnover respectively.
In attempt to improve foreign investor and issuer’s trust the BSE doubled down on its intentions to self-list “in the near future”. Under its 5 year strategic plan, which will pan out from 2022 to 2026, the BSE intends to “aggressively move into the global community to attract issuers and investors”. On that note, Imara says expectations on the growth of investor activity are high, further supported by BSE’s partnership with CNBC Africa and Bloomberg, where Bloomberg will float content about the BSE with a direct link to relevant information on its website.
The recently published market report by the bourse indicate that trading activity during January increased over three times relative to the corresponding period in 2021. According to the report, a total equity turnover of P113.9 million was recorded from traded volumes of 23.8 million shares as at the end of January.
During the corresponding period in 2021, a total equity turnover of P32.6 million and a total volume of 27.4 million shares traded were recorded. The top three traded companies during the period under review were Chobe (P43.3 million), Sefalana (P41.8 million) and Letshego (P11.8 million). The total turnover from these three companies accounted for 85.1 percent of total equity turnover, with the leading counter Chobe accounting for 38.0 percent of total equity turnover. In comparison to the same period in 2021, the top three traded companies accounted for 73.8 percent of total equity turnover with the leading counter Letshego accounting for 50.1 percent (P16.3 million) of total equity turnover.
Of the 31 listed companies including BBS on the Serala OTC Board, five depreciated in share price, seven appreciated in share price while 19 experienced no share price change in January. The top gainer over the month was RDCP with a 4.7 percent growth in share price, followed by Sechaba and Letshego with gains of 2.4 percent and 2.1 percent respectively. G4S experienced the biggest decline in share price of 9.7 percent followed by BBS and Cresta with declines of 6.3 percent and 2.8 percent respectively.
