Deputy chief executive officer of the BSE Thapelo Tsheole
The Botswana Stock Exchange, the leading bourse, is all set to float a new Exchange Traded Fund (ETF) to add onto the existing ones in a few months’ time.
Currently there are three ETF’s listed on the local exchange and bringing another one in 2015 will grow the number to four. The ETF’S are Bettabeta ETF, Newgold ETF and Newplat ETF.
“The announcement for the new ETF listing will be made in in the next two to three months,” the deputy chief executive officer of the BSE Thapelo Tsheole said.
ETFs remain among the fastest growing investment funds in major markets across the world. They are attractive because of their low costs, tax efficiency and stock-like features.
He highlighted that the turnover for ETF’s has improved in 2015 relative to 2014 on a comparable basis with significant inflows into the Bettabeta ETF, followed by Newgold and finally Newplat.
“Trades in ETFs since 2010 have exceeded the P1.0 billion mark and BSE is looking to list in the near term,” said Tsheole.
Naturally, exchange-Traded Funds (ETFs) are clearly poised to help the circulation of money on the local market. BettaBeta gives access to top 40 companies on the JSE while new NewGold gives access to gold stocks without having to physically buy gold. This helps in diversifying investor portfolios.
The BSE operates in an attractive environment as Botswana has no exchange controls which have helped improve inflows into the market. “Since we have stabilized, we want to bring people from southern Africa to buy ETF,” he added.
Tsheole called on market players to search Africa for ETFs and also boost BSE liquidity problems. Tsheole observed that ETFs improve liquidity and broaden the choice of investment securities in the market in the sense that they are another asset class or are investment securities to which investments funds can be diverted.
Previously, the exchange has encouraged participants to come up with local ETFs considering that Botswana is a resource country. Tsheole appealed to fund managers to assist in looking for stocks in Africa.
BettaBeta which listed at 32.95 on 11 May 2011 on Thursday it was settling at P41.90 with its turnover currently sitting at P326,5million. NewGold listed on 13 July2010 at P83.00 was trading at 107,20 with its turnover at P26,2million and Newplat which listed last year has 735,000 traded units and its turnover sitting at P82,1million.
THE DOMESTIC MARKET CAP EXCEED P50BN FOR THE 1ST TIME IN HISTORY…
The second quarter marked the highest turnover recorded in the history of the BSE on a quarterly basis and the 2nd highest in terms of volumes. What was also interesting to note was; almost 90% of the domestic counters ended the quarter on a positive footing, reflecting upbeat sentiments towards most of the counters, leading to a market average P/E of almost 15x, the highest in more than 2 years.
During the quarter, 241mn shares worth of P944.8mn exchanged hands, this was significantly higher than the trades in the prior quarter; a 57% increase in volumes and 69% surge in value traded.
The highest volumes were registered during the month of May. The huge quarterly volumes were mainly from Letshego; which has been topping the trades for a 6th straight quarter. The micro lender exchanged 35% of those volumes while property giant Turnstar and FNBB exchanged 10.4% and 8.5% respectively.
Despite the obvious trend of having high liquidity from the large caps, we saw some of the small market capitalization stocks like Cresta and Imara being very active during the quarter under review. Letshego posted daily average of about 1.4mn shares while other counters recorded less than 500,000 of daily shares traded, reflecting the increased liquidity of Letshego relative to other stocks.
Reflected by the strong rallies within the main board, was the positive gains made by the DCI during the quarter under review. All the 3 months recorded modest gains relative to other months during the quarter, with the highest monthly gain of 5% in May.
This was the only quarter where the DCI made positive m/m gains since the beginning of 2014. We have seen the uptrend of the DCI since the beginning of 2012 as it rose from 7,000 to end the quarter above the 10,500 points mark, portraying the vigorous growth achieved from most of the counters such as Sefalana, Sechaba and Chobe among others.
On a q/q basis the DCI leaped up by 10.3% (the 2nd highest in more than 4 years) as compared to the prior quarter where only 2% growth was registered. Wilderness was the largest gainer surging by 43% as investors were taking in their FY results which were characterized by 57% rise in PAT while its topline posted a 12% y/y increase.
However, the company released a cautionary statement, stating that the company has received a notice of intention to make an offer to acquire all the issued ordinary shares by Wine investments Limited though the cautionary was recently withdrawn.
Despite Covid-19 interrupting trade worldwide, exporting companies in Botswana which benefited from the Botswana Investment and Trade Centre (BITC) services realised P2.96 billion in export earnings during the period from April 2020 to March 2021.
In the preceding financial year, the sale of locally manufactured products in foreign markets had registered export revenue of P2, 427 billion against a target of P3, 211 billion BITC, which celebrates 10 years since establishment, continues to carry out several initiatives targeted towards expanding the Botswana export base in line with Botswana’s desire to be an export led economy, underpinned by a robust export promotion programme in line with the National Export Strategy.
The main products exported were swamp cruiser boats, pvc tanks and pvc pipes, ignition wiring sets, semi-precious stones, veterinary medicines, hair braids, coal, textiles (towels and t-shirts) and automobile batteries. These goods were destined mainly for South Africa, Zimbabwe, Austria, Germany, and Namibia.
With Covid-19 still a problem, BITC continues to roll out targeted virtual trade promotion missions across the SADC region with a view to seeking long-lasting market opportunities for locally manufactured products.
Recently, the Centre facilitated participation for Botswana companies at the Eastern Cape Development Council (ECDC) Virtual Export Symposium, the Botswana-Zimbabwe Virtual Trade Mission, the Botswana-Zambia Virtual Trade Mission, Botswana-South Africa Virtual Buyer/Seller Mission as well as the Botswana-Namibia Virtual Trade Mission.
BITC has introduced an e-Exporting programme aimed at assisting Botswana exporters to conduct business on several recommended e-commerce platforms. Due to the advent of COVID-19, BITC is currently promoting e-trade among companies through the establishment of e-commerce platforms and is assisting local companies to embrace digitisation by adopting e-commerce platforms to reach export markets as well as assisting local e-commerce platform developers to scale up their online marketplaces.
During the 2019/2020 financial year, BITC embarked on several initiatives targeted at growing exports in the country; facilitation of participation of local companies in international trade platforms in order to enhance export sales of local products and services into external markets.
BITC also helped in capacity development of local companies to compete in global markets and the nurturing of export awareness and culture among local manufacturers in order to enhance their skills and knowledge of export processes; and in development and implementation of trade facilitation tools that look to improve the overall ease of doing business in Botswana.
As part of building export capacity in 2019/20, six (6) companies were selected to initiate a process to be Organic and Fair Trade Certified. These companies are; Blue Pride (Pty) Ltd, Motlopi Beverages, Moringa Technology Industries (Pty) Ltd, Sleek Foods, Maungo Craft and Divine Morula.
In 2019 seven companies which were enrolled in the Botswana Exporter Development Programme were capacitated with attaining BOBS ISO 9001: 2015 certification. Three (3) companies successfully attained BOBS ISO 9001:2015 certification. These were Lithoflex (Pty) Ltd, General Packaging Industries and Power Engineering.
BITC’s annual flagship exhibition, Global Expo Botswana (GEB) to create opportunities for trade and strategic synergies between local and international companies. The Global Expo Botswana) is a premier business to business exposition that attracts FDI, expansion of domestic investment, promotion of exports of locally produced goods and services and promotion of trade between Botswana and other countries.
The portal also provides information on; measures, legal documents, and forms and procedures needed by Botswana companies that intend on doing business abroad. BITC continues to assist both potential and existing local manufacturing and service entities to realise their export ambitions. This assistance is pursued through the ambit of the Botswana Exporter Development Programme (BEDP) and the Trade Promotion Programme.
BEDP was revised in 2020 in partnership with the United Nations Development Programme (UNDP) with a vision to developing a diversified export-based economy. The programme focuses mostly on capacitating companies to reach export readiness status.
Prices for goods and services in this country continue to increase, with the latest figures from Statistics Botswana showing that in May 2022, inflation rate rose to 11.9 percent from 9.6 percent recorded in April 2022.
According to Statistics Botswana update released this week, the largest upward contributions to the annual inflation rate in May 2022 came from increase in the cost of transport (7.2 percent), housing, water, electricity, gas & other Fuels (1.4 percent), food & non-alcoholic beverages (1.1 percent) and miscellaneous goods & services (0.8 percent).
With regard to regional inflation rates between April and May 2022, the Rural Villages inflation rate went up by 2.5 percentage points, from 9.6 percent in April to 12.1 percent in May 2022, according to the government owned statistics entity.
In the monthly update the entity stated that the Urban Villages inflation rate stood at 11.8 percent in May 2022, a rise of 2.4 percentage points from the April rate of 9.4 percent, whereas the Cities & Towns inflation rate recorded an increase of 1.9 percentage points, from 9.9 percent in April to 11.8 percent in May.
Commenting on the national Consumer Price Index, the entity stated that it went up by 2.6 percent, from 120.1 in April to 123.2 in May 2022. Statisticians from the entity noted that the transport group index registered an increase of 7.3 percent, from 134.5 in April to 144.2 in May, mainly due to the rise in retail pump prices for petrol and diesel by P1.54 and P2.74 per litre respectively, which effected on the 13th of May 2022.
The food & non-alcoholic beverages group index rose by 2.6 percent, from 118.6 in April 2022 to 121.6 in May 2022 and this came as a result of increase in prices of oils & fats, vegetables, bread & cereal, mineral waters, soft drinks, fruits & vegetables juices, fish (Fresh, Chilled & Frozen) and meat (Fresh, Chilled & Frozen), according to the Statisticians.
The Statisticians said the furnishing, household equipment & routine maintenance group index rose by 1.0 percent, from 111.6 in April 2022 to 112.7 in May 2022 and this was attributed to a general increase in prices of household appliances, glassware, tableware & household utensils and goods & services for household maintenance.
The prices for clothing & footwear group index moved from 109.4 to 110.4, registering a rise of 0.9 percent during the period under review. Bank of Botswana has projected higher inflation in the short term, associated with the likelihood of further increases in domestic fuel prices in response to persistent high international oil prices and added that the possible increase in public service salaries could add also upward pressure to inflation in this country.
In the latest June 2022 global economic prospects, released last week the World Bank has warned that low global economic growth and economic activity in global commodity markets such as China and Europe could negatively affect export revenues for Botswana and other Sub Saharan countries.
Recent data from Statistics Botswana show that Botswana’s exports destined to the global markets such as Asia and the European Union (EU) on monthly basis accounts for around 60.1 percent and 20.1 percent respectively.
The World Bank last week lowered its 2022 projections of global economic growth and indicated that the new forecasts could be bad news for countries like Botswana who are dependent on export mineral revenues. The Bank noted that just over two years after COVID-19 caused the deepest global recession since World War II, the world economy is again in danger and stated that this time it is facing high inflation and slow growth at the same time.
In the recent June projections, the bank lowered its forecast of global economic growth from the January 4.1 percent to 2.1 percent. “Our June forecasts reflect a sizable downgrade to the outlook: global growth is expected to slow sharply from 5.7 percent in 2021 to 2.9 percent this year. This also reflects a nearly one-third cut to our January 2022 forecast for this year of 4.1 percent,” a team of World Bank economists noted in the June 2022 Global Economic Prospects.
The World Bank indicated that exports from Botswana and other Sub Saharan countries could suffer from a substantial deceleration of activity in China and Europe. The Bank noted that exporters of industrial metals, crude oil, and ores such as Angola, Democratic Republic of Congo, Republic of Congo, South Africa, and Zambia could suffer from a substantial deceleration of activity in China.
On the other hand a sharp contraction of growth in the euro area could hurt exporters of agricultural products such as beef, coffee, tea, tobacco, cotton, and textiles from Botswana, Ethiopia, Madagascar and Malawi. “The faster-than-expected deceleration of the global economy and increased volatility of commodity prices could hurt many SSA commodity exporters,” said World Bank President David Malpass.
Malpass indicated that subdued growth in the global markets for Botswana and other Sub Saharan exports will likely persist throughout the decade because of weak investment in most of the world.
He noted that with inflation now running at multi-decade highs in many countries and supply expected to grow slowly, inflation could remain higher for longer than currently anticipated. “Even if a global recession is averted, the pain of stagflation could persist for several years— unless major supply increases are set in motion. Amid the war in Ukraine, surging inflation, and rising interest rates, global economic growth is expected to slump in 2022. Several years of above-average inflation and below-average growth are now likely,” said Malpass.