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BSE to list new Exchange Traded Fund

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.

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Business

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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Business

Global CEOs Back Plan to Unlock $3.4 Trillion Potential of Africa Free Trade Area

23rd January 2023

African heads of state and global CEOs at the World Economic Forum Annual Meeting backed the launch of the first of its kind report on how public-private partnerships can support the implementation of the African Continental Free Trade Area (AfCFTA).

AfCFTA: A New Era for Global Business and Investment in Africa outlines high-potential sectors, initiatives to support business and investment, operational tools to facilitate the AfCFTA, and illustrative examples from successful businesses in Africa to guide businesses in entering and expanding in this area.

The report aims to provide a pathway for global businesses and investors to understand the biggest trends, opportunities and strategies to successfully invest and achieve high returns in Africa, developing local, sub-regional and continental value chains and accelerating industrialization, all of which go hand in hand with the success of the AfCFTA.

The AfCFTA is the largest free trade area in the world, by area and number of participating countries. Once fully implemented, it will be the fifth-largest economy in the world, with the potential to have a combined GDP of more than $3.4 trillion. Conceived in 2018, it now has 54 national economies in Africa, could attract billions in foreign investment, and boost overseas exports by a third, double intra-continental trade, raise incomes by 8% and lift 50 million people out of poverty.

To ease the pain of transition to its new single market, Africa has learned from trade liberalization in North America and Europe. “Our wide range of partners and experience can help anticipate and mitigate potential disruptions in business and production dynamics,” said Børge Brende, President, and World Economic Forum. “The Forum’s initiatives will help to ease physical, capital and digital flows in Africa through stakeholder collaboration, private-public collaboration and information-sharing.”

Given the continent’s historically low foreign direct investment relative to other regions, the report highlights the sense of excitement as the AfCFTA lowers or removes barriers to trade and competitiveness. “The promising gains from an integrated African market should be a signal to investors around the world that the continent is ripe for business creation, integration and expansion,” said Chido Munyati, Head of Regional Agenda, Africa, World Economic Forum.

The report focuses on four key sectors that have a combined worth of $130 billion and represent high-potential opportunities for companies looking to invest in Africa: automotive; agriculture and agroprocessing; pharmaceuticals; and transport and logistics.

“Macro trends in the four key sectors and across Africa’s growth potential reveal tremendous opportunities for business expansion as population, income and connectivity are on the rise,” said Wamkele Mene, Secretary-General, AfCFTA Secretariat.

“These projections reveal an unprecedented opportunity for local and global businesses to invest in African countries and play a vital role in the development of crucial local and regional value chains on the continent,” said Landry Signé, Executive Director and Professor, Thunderbird School of Global Management and Co-Chair, World Economic Forum Regional Action Group for Africa.

The Forum is actively working towards implementing trade and investment tools through initiatives, such as Friends of the Africa Continental Free Trade Area, to align with the negotiation process of the AfCFTA. It identifies areas where public-private collaboration can help reduce barriers and facilitate investment from international firms.

About the World Economic Forum Annual Meeting 2023

The World Economic Forum Annual Meeting 2023 convenes the world’s foremost leaders under the theme, Cooperation in a Fragmented World. It calls on world leaders to address immediate economic, energy and food crises while laying the groundwork for a more sustainable, resilient world. For further information,

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Business

Electricity generation down 15.8%

9th January 2023

Electricity generation in Botswana during the third quarter of 2022 declined by 15.8%, following operational challenges at Botswana Power Corporation’ Morupule B power plant, according to Statistics Botswana Index of Electricity Generation (IEG) released last week.

The index shows that local electricity generation decreased by 148,243 MWH from 937,597 MWH during the second quarter of 2022 to 789,354 MWH during the third of quarter of 2022.

This decrease, according to the index, was mainly attributed to a decline in power supply realized at Morupule B power station. The index shows that as a result of low power supply from the plant, imported electricity during the third quarter of 2022 increased by 76.3 percent (123,831 MWH), from 162,340 MWH during the second quarter of 2022 to 286,171 MWH during the current quarter and Statistics Botswana added that the increase was necessitated by the need to augment the shortfall in generated electricity.

In the index Statistics Botswana stated that Eskom was the main source of imported electricity at 42.0 percent of total electricity imports. “The Southern African Power Pool (SAPP) accounted for 38.4 percent, while the remaining 10.1, 9.1 and 0.5 percent were sourced from Electricidade de Mozambique (EDM), Cross-border electricity markets and the Zambia Electricity Supply Corporation Limited (ZESCO), respectively. Cross-border electricity markets are arrangements whereby towns and villages along the border are supplied with electricity from neighbouring countries such as Namibia and Zambia.”

The government owned statistics entity stated that distributed electricity decreased by 2.2 percent (24,412 MWH), from 1,099,937 MWH during the second quarter of 2022 to 1,075,525 MWH during the third quarter of 2022. The entity noted that electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 85.2 percent during the third quarter in 2022 and added that this gives a decline of 11.8 percentage points. “The quarter-on-quarter comparison shows that the contribution of electricity generated to electricity distributed decreased by 11.8 percentage points compared to the 85.2 percent contribution during the second quarter of 2022.”

Statistics Botswana meanwhile stated that the year-on-year analysis shows some improvement in local electricity generation. Recent figures from entity show that the physical volume of electricity generated increased by 36.3 percent (210,319 MWH), from 579, 036 MWH during the third quarter of 2021 to 789,354 MWH during the current quarter. According to Statistics Botswana electricity generated locally contributed 73.4 percent to electricity distributed during the third quarter of 2022, compared to a contribution of 57.7 percent during the same quarter in 2021. This gives an increase of 15.7 percentage points.

 

The entity noted that trends also show an increase in physical volume of electricity distributed from 2013 to the third quarter of 2022, thereby indicating that there are ongoing efforts to meet the domestic demand for power. “There has been a gradual increase of distributed electricity from the first quarter of 2013 to the third quarter of 2022, even though there are fluctuations. The year-on-year perspective shows that the amount of distributed electricity increased by 7.2 percent (71,787 MHW), from 1,003,738 MWH during the third quarter of 2021 to 1,075,525 MWH during the current quarter.”

The statistics entity noted that year-on-year analysis show that during the third quarter of 2022, the physical volume of imported electricity decreased by 32.6 percent (138,532 MWH), from 424,703 MWH during the third quarter of 2021 to 286,171 MWH during the third quarter of 2022. “There is a downward trend in the physical volume of imported electricity from the first quarter of 2013 to the third quarter of 2022. The downward trend indicates the country’s continued effort to generate adequate electricity to meet domestic demand, hence the decreased reliance on electricity imports.”

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