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BSE now feeling COVID-19 fever, could be heading to bears den

The Botswana Stock Exchange (BSE) beginning of this week has found a decline of three stocks, market experts see this as one of the signs that COVID-19 has now shown symptoms of infection on the local bourse.

There could be an out of sight meaning of why COVID-19 comes to this country in trinity. Just like BSE recording a decline of three stocks due to the coronavirus associated impact on local market, Botswana discovered first three cases of the pandemic, causing the nation to go on standstill.

Market observation suggest that the three stocks which fell in the beginning could be investors response to the State of Emergency which was announced last week to effect on the dead of Thursday night. Just by Friday last week Stockbrokers Botswana produced a gloomy account of the Domestic Company Index (DCI) failing by 0.15 percent with all prices changes for the week being negative.

Experts believe investors kept their money safe in Botswana as the country was still safe for COVID-19 before three first cases were announced and a declaration of State of Emergency or lockdown could have caused foreign investors to sell and run.

The market has its ups and downs-unfortunately we have entered a down cycle, and at the moment we are seeing international investors selling out, said a market research analyst. In its market summary released early in the week Motswedi Securities red flagged that, the COVID-19 pandemic, is making its mark known on the local equity market.

According to the stockbrokers research on Monday the volumes traded in the session amounted to 4.6 million shares, of which changed ownership across 12 stocks, with a total market value of P14.99mn.

According to BSE Market Status for the period 1 January to 31 March 2020, The DCI experienced a slight depreciation of 0.09 percent in the period under review (from January to March) in comparison to a 0.43 percent increase registered in the same period in 2019. Another depreciation was registered on the foreign companies front as FCI recorded a depreciation of 0.71 percent in quarter 1 of 2020 relative to a decrease of 0.26 percent over the same period in 2019.

The falling in numbers in the local bourse can be attributed to investors reaction to last week first cases of coronavirus and the subsequent declaration of State of Emergency.

This is because BSE Market Status report of January to 18 March, before COVID-19 was discovered in the local shores, showed the local managed to be the fourth liquid stock exchange in Africa out of 27 bourses, holding onto its 2020 gains while the pandemic made its presence felt on other indexes who fell on the negative bear status.

The local bourse made headlines as it got up 1.5 percent this week against others. But the latest BSE report in which it exchange was holding a comparative with other indices which it acknowledged were impacted by the volatility stemming from the COVID-19 pandemic, the local stock exchange showed to also be growing fur and claws like its counterparts.

According to the report, the DCIs US Dollar return over the quarter of 2020 amounted to a negative 11 percent on the back of the Pula depreciation of 12 percent against the dollar. The Johannesburg Stock Exchange ALSI also experienced massive losses with a depreciation of 39.5 percent over the quarter while the Stock Exchange of Mauritius (SEMDEX) lost 33.3 percent in US Dollar terms.

BSE turning from being stable to gradually growing fur and claws

However Motswedi Securities said the more liquid stocks, that is, those are deemed to be popular, have taken a turn for the bears in the market. If Botswana had not recorded any case of COVID-19, it took a long time to announce first cases, investors could have developed interest in BSE and made it a bull market, according to observations.

The local bourse is said to be illiquid, but was at least stable as its counterparts in African markets plunged in negatives. This week BSE is seen developing more fur and long claws, a metaphor for a stock market taking a turn for the bears in the market, declining or becoming a bear market.

On Monday companies in the DCI who pulled BSE down onto the bear market status are the once best performers like First National Bank Botswana(FNBB) which dropped 5 thebe to close to close at the price of P2.70/share, extending the stock’s yearly loss to -5.3 percent, according to Motswedi.

Another loser was Chobe which lost the largest in value by far in the day, to close at P11.00/share. This 4.3 percent depreciation in the share price of the company was somewhat expected, given that the impact of Covid-19 is really being felt in the tourism and hospitality sector, as local borders have been closed off to international visitors and various lockdowns implemented across the world, said Motswedi Securities.

Another bank which joined FNBB in the line of losers is BancABC which recorded decline in profit in its last week released financial results. According to Motswedi market research, BancABC, fell to its IPO price of P2.00/share, in its first movement of the year and this unfortunately resulted in the stock’s year to date ending the session at -1.0 percent.

An observer said banks including FNBB and BancABC are starting to feel the heat amid COVID-19 because of impairments and loan defaults now weighing heavily on them as lending is their main source of revenue, hence investor scare.

Investors notice

Many fear to buy shares now because the feel like BSE is now on decline like the rest and fear buying a bear market. But some believe buying stock can come with a good gamble and opportunities. One said it should be time to buy stock because it will give an investors the opportunity to negotiate a favourable price for themselves in future. An example would be buying Chobe stock that traded 50 thebe below the opening price on Monday, said one market analyst.

Motswedi Securities chief researcher Garry Juma said: It depends with ones risk appetite and the tenor of investment. If one is in for the long term, this is the time to buy some of those hard stocks to find, like Chobe which are now available and at a lower price.

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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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Business

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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