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Choppies on the rebound

Publishing Date : 08 October, 2018

Author : TSAONE SEGAETSHO

While there is rife speculation on the abrupt drop of giant retailer Choppies shares few days ago, the Chief Executive Officer of Botswana Stock Exchange Limited(BSEL) Thapelo Tsheole has seen the bright side. Choppies is estimated to have lost about P1.7 billion in value following the drop in share price.


When addressing journalists just after BSEL’s 5th Bell Opening Ceremony, Tsheole said there was a lot of interest by investors on Choppies and many were demanding information, a positive thing according to him. Choppies’s fall in share price has also been marred by a lot of speculation and controversy with some alleging that the increase in stock is because of the entity’s allegations of money laundering and fraud. Tsheole said they saw the allegations in media platforms and remain just that, “allegations will remain allegations”. Meanwhile experts believe the fall of Choppies emanated to the entity’s failure to release financial results.


 “The interesting thing is that at least now we are seeing a lot of activism among the shareholders which is what we have always encourage. A lot of people sometimes who own shares have a tendency to sit back thinking that the stock exchange is there to do something for them,” said Tsheole.


Tsheole revealed that even though they are practically owners of entities, investors tend to only ask questions when share prices fall, like the current case of Choppies. The BSEL said some even contact him but mistake BSEL’s role by asking the stock exchange “to save Choppies investors” especially when share prices fall drastically like in the case of Choppies. Some even want BSEL to investigate Choppies money laundering, according to Tsheole, the role to investigate such financial crimes rests with serious crime units or relevant authorities that deals with such lawlessness.


“Our role is not to investigate fraud or money laundering but to facilitate that listed entities complies in terms of the listing rules that any material information that could potentially affect the value of the shares is out to the investors,” said Tsheole.
Tsheole also explained that BSEL does not control share prices but only offers a platform for trading shares.

Also to provide sufficient information on a listed entity to avoid some people who would use privilege information to their advantage when taking investment decisions, said Tsheole. The BSEL chief also stated that the stock broker’s role is to ensure that everyone has equal opportunities to sufficient, quality or privilege information when taking any decision to trade.

THE DOUBLE EDGED SWORD OF FALL OF PRICE

Tsheole explained to journalists this week that the drop in shares of Choppies should not only be seen in the negative as some would see the positives. He said in the realities of the market or the game of stock exchanges, when prices fall some sees hope and buy shares while the prices are still low while others see gloom and walks out of.


Tsheole also said the speculation of Choppies going down because it is involved in controversies may be a tact used by those who wish to see the retailer’s price go down so that they can take it by hostile takeover. He hinted that probably Choppies has many rivals as it traverses Southern Africa to mark its footprint, giving completion to older retailers who may come with other tactics of taking the local supermarket down.


While he confirmed that they are currently giving Choppies a hard time to release share and that they are also hitting it with charges, Tsheole lauded the giant retailer that “it is a credible company and a big brand and it has expanded into Africa and giving those big South African companies competition.”

Tsheole also said Batswana are in a panic mode maybe because of their familiarity with Choppies as the common local retailer, but fall of shares have happened many times in the history of stock markets. He gave example of giant social network Facebook whose stock fell drastically earlier this month due to involvement in a ‘data theft’ scandal.  He said it is the reality of the game that some lose badly in the stock market while some see big opportunities.

THE SHARE PRICE REBOUND

Choppies’ share price fell as much as 85% on Tuesday morning after the Botswana-based food retailer said it would miss a deadline to publish its financial results for the year to June. The group, which is reportedly in a dispute about its shareholding structure in Zimbabwe, said "a number of matters requiring the attention of the board and management, which may impact materially on the results, are being considered.

"The possible reporting impacts of these matters have not yet been finally and fully determined," the company said in a statement, adding it would miss the reporting deadline of September 30 2018. The group said its profit after tax would fall by at least 20%, though it could not yet quantify the decline. Choppies’ shares closed 73% lower on the Botswana Stock Exchange and 72% lower at 46c on the JSE.

The group, which operates across Southern and East Africa, listed on the JSE in May 2015 at R4.90 per share. The Choppies shares were trading again on wednesady and were on a rebound, trading at 65thebe after dropping to 40 thebe on Tuesday.

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