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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 stockbroker’s 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 DCI’s 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 one’s 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.”

Business

Gambling Authority tender dangles as a jittery lottery quandary

30th November 2020
SEFALANA MD: CHANDRA CHAUHAN

Lucrative and highly anticipated national lottery tender that saw several Batswana businessmen partnering to form a gambling consortium to pit against their South African counterparts, culminates into a big power gamble.

WeekendPost has had a chance to watch lottery showcase even before the anticipated and impending national lottery set-up launches. A lot has been a big gamble from the bidding process which is now set for the courts next year January following a marathon legal brawl involving the interest of the gambling fraternity in Botswana and South Africa.

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The uncertainty of getting the next meal in Botswana

30th November 2020
uncertainty of getting the next meal

Households representing more than half of Botswana’s population-mostly residing in rural areas- do not know where their next meal will come from, but neither do they take into consideration the quality and/or quantity of the food they consume.

This is according to the latest Prevalence of Food Insecurity in Botswana report which was done for the 2018/19 period and represents the state of food insecurity data even to this time.
The Prevalence of Food Insecurity was released by Statistics Botswana and it released results with findings that the results show that at national level 50.8 percent of the population in Botswana was affected by moderate to severe food insecurity in 2018/19, while 22.2 percent of the population was affected by severe food insecurity only.

According to the report, this translates to 27 percent of the population being food secure that is to say having adequate access to food in both quality and quantity. According to Statistician General, Burton Mguni, when explaining how the food data was compiled, Food and Agriculture Organization of the United Nations (FAO), is custodian of the “Prevalence of Undernourishment (PoU)” and “Prevalence of moderate or severe food insecurity in the population based on the Food Insecurity Experience Scale (FIES)” SDG indicators, for leading FIES data analysis and the resultant capacity building.

“The FIES measures the extent of food insecurity at the household or individual level. The indicator provides internationally comparable estimates of the proportion of the population facing moderate to severe difficulties in accessing food. The FIES consists of eight brief questions regarding access to adequate food, and the questions are answered directly with a yes/no response. It (FIES) complements the existing food and nutrition security indicators such as Prevalence of Undernourishment.

According to the FIES, with increasing severity, the quantity of food consumed decreases as portion sizes are reduced and meals are skipped. At its most severe level, people are forced to go without eating for a day or more. The scale further reveals that the household’s experience of food insecurity may be characterized by uncertainty and anxiety regarding food access and compromising the quality of the diet and having a less balanced and more monotonous diet,” says Mguni.

The 50.8 percent of the population in Botswana which was affected by moderate to severe food insecurity are characterized as people experiencing moderate food insecurity and face uncertainties about their ability to obtain food. These people have been forced to compromise on the quality and/or quantity of the food they consume according to the report on food insecurity.

Those who experience severe food insecurity, the 22.2 percent of the population, are people who have typically run out of food and, at worst, gone a day (or days) without eating. According to the statistics, rural area population experienced moderate to severe food insecurity at 65 percent while urban villages were at 46.60 percent and cities/town were at 31.70 percent. Those experiencing the most extreme and severe insecurity were at rural areas making 33.10 percent while urban villages and towns were at 11.90 percent and 17.50 respectively.

According to a paper compiled by Sirak Bahta, Francis Wanyoike, Hikuepi Katjiuongua and Davis Marumo and published in December 2017, titled ‘Characterization of food security and consumption patterns among smallholder livestock farmers in Botswana,’ over 70 percent of Botswana’s population reside in rural areas, and majority (70%) relies on traditional/subsistence agriculture for their livelihoods.

The study set out to characterize the food security situation and food consumption patterns among livestock keepers in Botswana. “Despite the policy change, challenges still remain in ensuring that all persons and households have access to food at all times. For example, during an analysis of the impacts of rising international food prices for Botswana, BIDPA reported that food prices tended to be highest in the rural areas already disadvantaged by relatively low levels of income and high rates of unemployment,” said the study.

According to the paper, about 9 percent of households were found to be food insecure and this category of households included 6 percent of households that ranked poorly and 3 percent that were on the borderline according to the World Food Programme’s (WFP) definition of food security.

Media reports state that the World Bank has warned that disruption to production and supply chains could ‘spark a food security crisis’ in Africa, forecasting a fall in farm production of up to 7 percent, if there are restrictions to trade, and a 25 percent decline in food imports.

Food security in Botswana or food production was also attacked by the locust pandemic which swept out this country’s vegetation and plants. The locust is said to have contributed to 25 percent loss in production.

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Business

Solid demand for diamonds towards the ‘gift’ season

30th November 2020
Diamonds

Global lockdown have been a thorn in diamonds having shiny sales, but a lot of optimism shows with the easing of Covid-19 restrictions, the precious stones will be bought with high volumes towards festive season. The diamond market is however warned of the resurgence of Covid-19 in key markets presents ongoing risks amid the presence and optimist about the new Covid-29 vaccines.

The latest findings published as De Beers Group’s latest Diamond Insight ‘Flash’ Report, which looks at the impact of the pandemic on relationships and engagements, has revealed that in the US that more couples than ever are buying diamond engagement rings. Bridal sales is mostly the primary source of diamond jewellery demand in recent months, De Beers said.

According to De Beers, interviews with independent jewellers around the US revealed that the rate of couples getting engaged has increased compared with the period when Covid-19 first had an impact in the US in the spring.

“In addition, despite challenging economic times, consumers were spending more than ever on diamond engagement rings – often upgrading in colour, cut and clarity, rather than size. Several jewellers speculated that with consumers spending less on elaborate weddings and/or honeymoons in the current environment, they had more to spend on choosing the perfect ring,” said De Beers.

According to De Beers, a national survey of 360 US women in serious relationships, undertaken in late October in collaboration with engagement and wedding website, The Knot. This survey is said to have found that the majority of respondents (54%) were thinking more about their engagement ring than the wedding itself (32%) or the honeymoon (15%), supporting jewellers’ hypothesis that engagement ring sales were benefiting from reduced wedding and travel budgets in light of Covid-19 restrictions.

When it came to researching engagement rings, online was by far the predominant channel for gaining ideas/inspiration at 86% of consumers surveyed, with 85% saying they had saved examples of styles they liked, according to De Beers. According to the survey, only a uarter of respondents said they had looked in-store at a physical location for design inspiration.

“For many couples, the pandemic has brought them even closer together, in some instances speeding up the path to engagement after forming a deeper connection while experiencing lockdown and its associated ups and downs as a partnership. Engagement rings are taking on even greater symbolism in this environment, with retailers reporting couples are prepared to invest more than usual, particularly due to budget reductions in other areas,” De Beers CEO Cleaver said.

According to De Beers Group, its Diamond Insight Flash Report series is focused on understanding the US consumer perspective in light of Covid-19 and monitoring how it evolves as the crisis evolves. Also, the company said, it is augmenting its existing research programme with additional consumer, retailer and supply chain touch-basis to understand the pain points and the opportunities for stakeholders across the diamond pipeline.

Demand for diamonds is as hard and resilient as the precious stone itself. De Beers pocketed US$ 450 million in its recently held ninth rough diamond sales cycle, and the company says it is more flexible approach to rough diamond sales during the ninth sales cycle of 2020, with the Sight event extended beyond its normal week-long duration.

“Steady demand for De Beers Group’s rough diamonds continued in the ninth sales cycle of the year, reflecting stable consumer demand for diamond jewellery at the retail level in the US and China, and expectations for reasonable demand to continue throughout the holiday season. However, the resurgence of Covid-19 infections in several consumer markets presents ongoing risks,” said De Beers CEO Bruce Cleaver recently.

High expectations are on diamonds being a sentimental gift for holiday season or as the most fetished gift. However the ninth cycle was lower than the eighth which registered US$ 467 million. For the last year period which corresponds with the current one, De Beers managed to raise US$ 400.

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