StanChart blemishes sector’s run on the BSE

• Share prices of three listed banks appreciate • StanChart share price hardest hit • Banks gain P658 million of market cap

StanChart blemishes sector’s run on the BSE

On a year-to-date basis, the share price of First National Bank Botswana (FNBB) has accelerated 16.33 percent to become the best performing banking stock on the Botswana Stock Exchange (BSE), The Business Weekly & Review has established.

By close of business on Wednesday, the bank - which is led by Chief Executive Officer (CEO) Steven Bogatsu and Managing Director (MD) Keabetswe Pheko-Moshagane - was trading at P2.85. This is compared to the P2.45 with which the bank opened the year 2019. FNBB has been steadily appreciating and is now the second best performing stock behind Letlole La Rona.

This on the background of steadily growing profitability by the bank which is the most profitable in bank Botswana and the most capitalised bank on the BSE. After appreciating 16 percent, the bank has gained over P1 billion of market capitalisation.  

The bank has appreciated by 5.36 percent. Barclays’ is the most expensive banking stock and is currently trading at P5.50 compared to P5.21 at the beginning of the year. As the bank appreciated, it has gained over P247 million as market capitalisation. The bank is currently valued P4.686 billion. It has also been posting a good set of results and recently paid a heavy dividend, which attracts investors.

BancABC is the third best performing banking stock. It has appreciated by 2 percent on a year-to-date basis to trade at P2.04 from P2.00 January. The bank has added about P29 million to its market capitalization, which is now estimated at P1.479 billion. But BancABC’s profitability has been going south. Infact, the bank is the only one among the top four which has registered negative growth in its recently published results.

StanChart remains the worst performing banking stock on the BSE, decelerating by 56.05 percent on a year-to-date basis. The bank has endured a bout of depreciation since reporting P189 million losses in 2017. Despite that, StanChart has returned to profitability, though its share price still took a further knock. It currently trades at P1.67 from P3.80 in January. The bank shed P635 million of market capitalisation to offset the gains of other banks to the sector.

The bank’s CFO, Dr Mbako Mbo, previously said they had observed that the trades and the volumes which impacted StanChart share price came from as little as 100 shares which are retail investors. If there is no sufficient liquidity, what tends to happen, according to Dr Mbo, is that the stock price is affected by small and sporadic trades. He says retail investors typically would dispose shares, in most cases at the earliest possible time. “Obviously it speaks to the shareholding structure that is also exposed to a lot of floating retail shares,” he noted. “You should be worried if there’s a dump of your shares and that dump is leading to a crash in (the) share price.”

But Dr Mbo confidently said in StanChart’s case, institutional investors and other large investors have stayed put. “So that sort of takes away fundamental investor concerns on the shares,” he concluded. “So the very small trades more often than not don’t have much to do with market sentiments or lack of market confidence. That the biggest takeaway.”