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.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.