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BSE’s DCI losses spark

The Botswana Stock Exchange’s Domestic Company Index (DCI) lost 95 points during the last three months to end the second quarter at 10,107.12 points, reflecting a decline of 0.93%. The decline in the second quarter follows the 3.8% decline experienced in the first quarter, therefore in the past 6 months the DCI has lost 4.74% and 5.45% in the last 12 months. In this quarter, as in the first quarter, the rally was led by property and tourism stocks while retail and the financial stocks have been most hit.  

It has been a rough start for global equities worldwide following a global markets rout that wiped trillions worth of equities valuation early in 2016 as the world’s largest economy fumbled. The precipitous fall in the Chinese equities led to a global contagion resulting in major markets taking a hit and sparking fresh concerns that a financial crisis is looming.

While the global markets were still reeling from the shock, the United Kingdom voted to leave the European Union, the aftermath was a shakeup in the financial markets that saw leading indices shedding off points. The turmoil in the financial markets has sparked fears that another financial crisis similar to the one experienced in 2008 is looming large in the horizon.

The BSE’s DCI opened the year at 10,610.14 points and from there on the DCI has been in decline. The first quarter ended at 10,2o2.64, representing a decline of 3.8%. The losses were extended in the second quarter with the DCI failing to find a footing, causing concerns amongst investors that their investments this year might be lower than the previous year. The index has been put under pressure by retail and financial stocks which are seen as being more risky given the prevailing market conditions.

The second quarter picks up from the first quarter with both sides of the coin, the gainers and losers, comprising mostly of the same companies that featured in the previous quarter. The trend further continues with property stocks outperforming the DCI index, with the exception of Letlole La Rona.

The travel and leisure (tourism) stocks maintained their favourability amongst investors as they continue to appreciate in value. The financial stocks continue to struggle, with only the exception of Botswana Insurance Holdings Limited and Barclays, as the two financial giants managed to post gains in both quarters. Big retailers also suffered losses signalling that investors are worried about the companies’ profitability given the stubbornly low inflation.

The top 5 gainers in the second quarter of the year were led by Cresta, the leading hotel operator in the country. Its share price has appreciated by 6.5% in the second quarter, bringing its yearly gains to 13%. New African Properties which broke records two weeks back after a single day trading of 26% of its issued shares worth P457.3 million has impressed with year to date returns of 10.6% after gaining 6.2% in the last three months. The Botswana Insurance Holdings Limited remained in the top five performers after a good showing in the first quarter. It retained third position in the second quarter after advancing by 3.8%, totalling its yearly returns to 9%. Chobe, a tourism outfit which operates luxurious lodges saw its share price jump by 5.28% in the quarter under review while its year to date gains is at 8.4%. Turnstar Holdings wrapped up our top five gainers as the real estate developer managed an impressive 6.2% increase in share price, bringing its yearly returns to 5.9%.

Other notable positive movements in the second quarter include RDC properties which brought in 3.13% while its year to date returns stand at 5.20%. Wilderness Holdings gained 5.2%, extending its yearly gains to 3.1%. Primetime moved by 1.3% resulting in 3.8% of year to date returns. Meanwhile Barclays remains the only bank so far this year to deliver share price gains as it locked in 2.9% in yearly returns.  

Botswana Telecommunications Corporation Limited listed in April. The company on the first day of trading closed atP1.30, an incredible 30% surge from P1. However, it the shares quickly retreated and briefly traded for around P1.20 until settling for the current P1.10 price, which is still a win to the shareholders as it represent a 10% premium on the initial P1 they paid during the Initial Public Offering(IPO).

On the losing side, Standard Chartered Bank which is the oldest bank to operate in Botswana was the biggest loser as its share price plunged to new lows as it lost 19% and bringing the yearly losses to 24%. The embattled bank is having a bad year in the stock market after it posted profit which was 85% lower than the previous period. Letshego, the pan-African financial services provider continues to struggle despite its highly liquid stock. Letshego has seen its share price plummet by as much as 2.4% in the second quarter, bringing the yearly losses to 14%. The financial stocks continued the downward trend as First National Bank Botswana dropped 5% resulting in year to date loss of 11%. Choppies Enterprises had its share price tank by 2.4% in the last 3 months, extending its yearly losses to 9%. The furniture shop giant, Furnmart, lost 3% in the second quarter, delivering year to date loss of 4.4%.

The oldest companies in the stock market in terms of listing, Sefalana and Sechaba have had subdued share movements, in the end the two giants are still yet to post positive gains, with Sefalana down by 3.62% in yearly returns while Sechaba is trailing behind by yearly losses of about 1.7%.

The usually inactive Foreign Domestic Index has been on a winning streak as the index recorded positive growth of about 1.1%, pushing the FCI year to date gains by 1.5%.

The index was rallied by Botswana Diamonds which delivered 143% returns in the second quarter, while its yearly gains are at an impressive 162%. Lucara Diamond Corporation has not only impressed so far with its exceptional diamonds as its share price has been soaring since the discovery of Lesedi La Rona. The yearly returns stand at 70% after gaining about 45% in the second quarter. While companies trading under the foreign counter remained largely flat, Shumba Energy share price slid down by 9%, bringing its yearly losses to 10%.

With the first half of the year dusted, the question on many investors’ minds is whether the stock markets will improve without any further shocks or go through another crisis. In Botswana’s case, the probability of the DCI turning around to deliver good returns remains shaky. According to analysts at Trading Economics, they estimate it to trade at 9980.00 points in the third quarter, a further 1.3% decline.

“Botswana Stock Market (BSI DCI) Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts’ expectations. We model the past behaviour of Botswana Stock Market (BSI DCI) using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Botswana Stock Market (BSI DCI) – was last predicted on Thursday, June 30, 2016,” they revealed in a research note.

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Business

Banking on Your Terms: Exploring the World of Self-Service Banking

23rd February 2024

In today’s digital age, banking is no longer just about visiting a branch during business hours. It’s about putting you, the customer, in the driver’s seat of your financial journey. But what exactly is self-service banking, and how do you stand to benefit from it as a customer?

Self-service banking is all about giving you the power to manage your finances on your terms. Whether you want to check your account balance at midnight, transfer money while on vacation, or deposit cash without waiting in line, self-service banking makes it possible. It’s like having a virtual branch at your fingertips, ready to assist you 24/7.

This shift towards self-service banking was catalyzed by various factors but it became easily accessible and accepted during the COVID-19 pandemic. People of all ages found themselves turning to digital channels out of necessity, and they discovered the freedom and flexibility it offers.

Anyone with a bank account and access to the internet or a smartphone can now bank anywhere and anytime. Whether you’re a tech-savvy millennial or someone who’s less comfortable with technology, you as the customer have the opportunity to manage your finances independently through online banking portal or downloading your bank’s mobile app. These platforms are designed to be user-friendly, with features like biometric authentication to ensure your transactions are secure.

Speaking of security, you might wonder how safe self-service banking really is. Banks invest heavily in encryption and other security measures to protect your information. In addition to that, features like real-time fraud detection and AI-powered risk management add an extra layer of protection.

Now, you might be thinking, “What’s the catch? Does self-service banking come with a cost?” The good news is that for the most part, it’s free. Banks offer these digital services as part of their commitment to customer satisfaction. However, some transactions, like wire transfers or expedited bill payments, may incur a small service fee.

At Bank Gaborone, our electronic channels offer a plethora of services around the clock to cater to your banking requirements. This includes our Mobile App, which doesn’t require data access for Orange and Mascom users. We also have e-Pula Internet Banking portal, available at https://www.bankgaborone.co.bw as well as Tobetsa Mobile Banking which is accessible via *187*247#. Our ATMs also offer the flexibility of allowing you to deposit, withdraw cash, and more.

With self-service banking, you have the reins of your financial affairs, accessible from the comfort of your home, workplace, or while you’re on the move. So why wait? Take control of your finances today with self-service banking.

Duduetsang Chappelle-Molloy is Head: Marketing and Corporate Communication Services

 

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Business

Botswana records over P6 billion trade deficit

7th February 2024

Botswana has recently recorded a significant trade deficit of over P6 billion. This trade deficit, which occurred in November 2023, follows another deficit of P4.7 billion recorded in October of the same year. These figures, released by Statistics Botswana, highlight a decline in export revenues as the main cause of the trade deficit.

In November 2023, Botswana’s total export revenues amounted to P2.9 billion, a decrease of 24.3 percent from the previous month. Diamonds, a major contributor to Botswana’s exports, experienced a significant decline of 44.1 percent during this period. This decline in diamond exports played a significant role in the overall decrease in export revenues. However, diamonds still remained the leading export commodity group, contributing 44.2 percent to export revenues. Copper and Machinery & Electrical Equipment followed, contributing 25.8 percent and 10.1 percent, respectively.

Asia emerged as the leading export market for Botswana, receiving exports worth P1.18 billion in November 2023. The United Arab Emirates, China, and Hong Kong were the top destinations within Asia, receiving 18.6 percent, 14.2 percent, and 3.8 percent of total exports, respectively. Diamonds and Copper were the major commodity groups exported to Asia.

The Southern African Customs Union (SACU) received Botswana’s exports worth P685.7 million, with South Africa being the main recipient within SACU. The European Union (EU) received exports worth P463.2 million, primarily through Belgium. Australia received exports worth P290 million, while the United States received exports valued at P69.6 million, mostly composed of diamonds.

On the import side, Botswana imported goods worth P9.5 billion in November 2023, representing an increase of 11.2 percent from the previous month. The increase in imports was mainly driven by a rise in Diamonds and Chemicals & Rubber Products imports. Diamonds contributed 23.3 percent to total imports, followed by Fuel and Food, Beverages & Tobacco at 19.4 percent and 15.0 percent, respectively.

The SACU region was the top supplier of imports to Botswana, accounting for 77.7 percent of total imports. South Africa contributed the largest share at 57.2 percent, followed by Namibia at 20.0 percent. Imports from Asia accounted for 9.8 percent of total imports, with Diamonds, Machinery & Electrical Equipment, and Chemicals & Rubber Products being the major commodity groups imported. The EU supplied Botswana with imports worth 3.2 percent of total imports, primarily in the form of Machinery & Electrical Equipment, Diamonds, and Chemicals & Rubber Products.

Botswana’s recent trade deficit of over P6 billion highlights a decline in export revenues, particularly in the diamond sector. While Asia remains the leading export market for Botswana, the country heavily relies on imports from the SACU region, particularly South Africa. Addressing the trade deficit will require diversification of export markets and sectors, as well as efforts to promote domestic industries and reduce reliance on imports.

 

 

 

 

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Business

Business sector optimistic about 2024

7th February 2024

The business sector in Botswana is optimistic about the year 2024, according to a recent survey conducted by the Bank of Botswana (BoB). The survey collected information from businesses in various sectors, including agriculture, mining, manufacturing, construction, and finance, among others. The results of the survey indicate that businesses expect trading conditions to improve in the first quarter of 2024 and remain favorable throughout the year.

The researchers found that firms anticipate improvements in investment, profitability, and goods and services exported in the fourth quarter of 2023 compared to the previous quarter. These expectations, combined with anticipated growth in all sectors except construction and real estate, contribute to the overall confidence in business conditions. Furthermore, businesses expect further improvements in the first quarter of 2024 and throughout the entire year.

Confidence among domestic market-oriented firms may decline slightly in the first quarter of 2024, but overall optimism is expected to improve throughout the year, consistent with the anticipated domestic economic recovery. Firms in sectors such as mining, retail, accommodation, transport, manufacturing, agriculture, and finance are driving this confidence. Export-oriented firms also show increased optimism in the first quarter of 2024 and for the entire year.

All sectors, except agriculture, which remains neutral, are optimistic about the first quarter of 2024 and the year ending in December 2024. This optimism is likely supported by government interventions to support economic activity, including the two-year Transitional National Development Plan (TNDP) and reforms aimed at improving the business environment. The anticipated improvement in profitability, goods and services exported, and business investment further contributes to the positive outlook.

Firms expect lending rates and borrowing volumes to increase in the 12-month period ending in December 2024. This increase in borrowing is consistent with the expected rise in investment, inventories, and goods and services exported. Firms anticipate that domestic economic performance will improve during this period. Domestic-oriented firms perceive access to credit from commercial banks in Botswana to be relaxed, while export-oriented firms prefer to borrow from South Africa.

During the fourth quarter of 2023, firms faced high cost pressures due to increased input costs, such as materials, utilities, and transport, resulting from supply constraints related to conflicts in Ukraine-Russia and Israel-Hamas. According to the survey report, the firms noted that cost pressures during the fourth quarter of 2023 were high, mainly attributable to increase in some input costs, such as materials, utilities, and transport arising from supply constraints related to the Ukraine-Russia and Israel-Hamas wars. β€œHowever, firms’ expectations about domestic inflation decreased, compared to the previous survey, and have remained within the Bank’s 3 – 6 percent objective range, averaging 5.4 percent for 2023 and 5.4 percent for 2024. This suggests that inflation expectations are well anchored, which is good for maintenance of price stability,” reads the survey report in part.

However, firms’ expectations about domestic inflation decreased compared to the previous survey, and inflation expectations remained within the Bank’s objective range of 3-6 percent. This suggests that inflation expectations are well anchored, which is beneficial for maintaining price stability.

In terms of challenges, most firms in the retail, accommodation, transport, manufacturing, construction, and finance sectors considered the exchange rate of the Pula to be unfavorable to their business operations. This is mainly because these firms import raw materials from South Africa and would prefer a stronger Pula against the South African rand. Additionally, firms in the retail, accommodation, transport, and mining sectors cited other challenges, including supply constraints from conflicts in Russia-Ukraine and Israel-Hamas, as well as new citizen economic empowerment policies that some firms considered unfavorable to foreign direct investment.

On the positive side, firms highlighted factors such as adequate water and electricity supply, a favorable political climate, an effective regulatory framework, the availability of skilled labor, and domestic and international demand as supportive to doing business in Botswana during the fourth quarter of 2023.

Overall, the business sector in Botswana is optimistic about the year 2024. The anticipated improvements in trading conditions, supported by government interventions and reforms, are expected to drive growth and profitability in various sectors. While challenges exist, businesses remain confident in the potential for economic recovery and expansion.

 

 

 

 

 

 

 

 

 

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