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Stock market suffered profit taking in August

The Botswana Stock Exchange (BSE) suffered some profit taking during the month of August from some of the banks as the industry environment became more challenging.

 This was reflected by the Domestic Companies Index shedding about 40 basis points in August.  Heavy weights like Standard Chartered, First National Bank, Barclays pulled down the index recording losses for the year ended 30 June 2015 owing to the challenging trade environment which has slowed down lending and tightened margins.

“The Industry environment for the banks became more challenging hence we experienced some profit taking in the market,” Tlotlo Ramalepa an investment analyst said. Despite some profit taking there were some huge gains from some of the large caps such as BIHL, Choppies and Sefalana and some mid-small caps such as Turnstar, FSG and G4S.

The BIHL group's life insurance division saw premium income growing 33 percent over first half 2014 from P 972 million to P1.29 billion with most income lines, contributing positively Ramalepa said for the year thus far the domestic board looks stronger, with a return of almost 14%, led by the tourism counters with over 50% returns.

“This follows their upbeat year-end results though the global fragile landscape, currently, presents a potential challenge to the sector going forward,” he said.

 All of the property stocks are also cruising on the positive territory as investors sought for attractive dividends with some of the counters extending their property portfolios even outside Botswana. On a different note, Ramalepa highlighted that it has not been a very exciting year for the banks as NIMs, ROEs, and profitability growth came under huge pressure due to relatively lower interest rate and liquidity constraints.

“The circle might not be over as we could see another rate cut given the subdued economic growth outlook,” he said.

  Ramalepa said the foreign board is very liquid and hence the delisting of African Copper did not have huge impact on the activity of the BSE.  “We have seen a tumble in crude prices by mid-2014 which has helped us have 2 successive petrol cuts this year in our economy which eased our inflation rate and high inflation distorts real returns, thus it has absolutely contributed positively towards investor returns,” he said.

Looking ahead, considering the huge rallies over the year, further profit taking could be in store as investors may want to cash in some of their investments.

“However this does not mean potential growth is impaired or unachievable as we have seen growth plans from the retail industry outside our borders and the property counters as well. Growth in Botswana can still be achieved as we have seen some of the counters which only has operations in Botswana stretching their profitability, like BIHL,” he said.

 Although BIHL market share within the insurance space has come under huge pressure, the group has focused on efficiencies  which has helped grow its earnings and its embedded value.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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