A trend has emerged where company directors are buying shares in companies they hold directorships of and this fashion is happening across all the sectors in the Botswana Stock Exchange.
Market watchdogs and observers see this as a movement by shareholders to increase shares since share prices are currently low hence these will be good purchases.
Before the end of markets last week retail moguls Ramachandran Ottapathu and his long-time business partner, Farouk Ismail, each bought 5 million shares of Choppies when the share price was 60 thebe; together amassing 10 million ordinary shares at P3 million.
On Thursday it was announced that Choppies founding shareholders bought shares from their own company, Ottapathu 8 million shares worth P4.8 million and Ismail 5 million shares at a tune of P3 million.
“The Choppies Directors claimed the 13.23 million shares transaction that went through the market on Tuesday. The shares were almost evenly split between the company’s Chief Executive Officer and a Non-Executive Director — and all went through the market at the prevailing market price of P0.60/share,” said Motswedi Securities on Thursday.
Another Choppies shares transaction done by director, Ismail, was announced by the local stock exchange midweek. Ismail, alone on Tuesday, bought 365 000 shares with the same share price of 60 thebe and they costed him P219 000. So far Ismail spent P3.2 million to buy shares from Choppies.
On Tuesday Motswedi Securities said trading on the local exchange accelerated, as the number of shares traded climbed to 19.44 million with a turnover of P13.21 million, from the previous day’s modest activity of 62 100 shares valued at P551 000. Talking of Ismail’s midweek transaction, the stockbroker said the market saw another large block of Choppies shares moving across the board, with this block being slightly bigger at 13.27 million shares valued at P7.96 million.
The same week saw Choppies holding the stranglehold of the local market, claiming the overall liquidity with trades that crossed 10. 4 million shares, according to Motswedi Securities. “This being a little over 70 percent of the total 14.7million shares that went through the market in the week. The total turnover was at P11.4 million – a considerable increase from the prior week’s turnover of P3.5million,” said Garry Juma and Salome Makgatle, Motswedi Securities researchers.
Both the two directors in a brief encounter with BusinessPost this week acknowledged their share buying galore as a vote of confidence on their enterprise. “Only our confidence in the company,” they both agreed.
The two directors buying spree came four days after Choppies went for the 2018 and 2019 Extraordinary Meeting concurrently. According to fund management firm Kgori Capital, in the 2018 Extraordinary Meeting, all resolutions were passed by 82.0 percent and above with the exception of: Ordinary Resolution 1, approval of the 30 June 18 financial statements, 46.4 percent of shareholders voted against and 53.5 percent voted in favour. The other exception was a Special Resolution, ratification of donations made, where 39.0 percent of shareholders voted against and 60.5 percent voted in favour.
For the 2019 meeting, all resolutions were passed by 81.5 percent and above with the exception of; Ordinary Resolution 1, approval of the 30 Jun 19 financial statements, 46.5 percent of shareholders voted against and 53.4 percent voted in favour. Again, the Special Resolution of ratification of donations to be made won amassing 60.4 percent against 39.1 percent votes.
This month has already seen six deals involving property giant Turnstar Group Managing Director, Gulaam Abdoola. Two of the deals he was dealing in he dealt in his personal capacity while the others his associates were the ones purchasing the shares. On Tuesday Turnstar announced that Abdoola has bought 3000 shares at a share price of P2.50 for P7500.
Last week, before the markets closed, Choppies directors in their buying spree were joined by the Managing Director of property giant, Turnstar, announcing purchase of the company’s shares by a director. According to Kgori Capital, Turnstar Group Managing Director, Abdoola, bought 10,699 shares at P2.20 – P2.40 per share.
The company last week Thursday further announced that the Managing Director’s associate Moosa Abdoola, also amassed 5,000 shares at P2.50 per share and the time when the share price was P2.50 (a year to date comparison of -11.03 percent). Last week Wednesday another associate of Turnstar Managing Director, Abdoola, by the name of Ahmed Ismail Patel, purchased 1 000 shares for P2500.00.
The same day Mrs Hawa Amod Abdoola, an associate of the Managing Director closed in on 3000 shares at the total transactional value of P7500.
“Turnstar closed the week 13.6 percent higher at P2.50/share. The price gain shaved off almost half of the stock’s year to date losses, to close at negative 11 percent. It is worthy to note that this gain in Turnstar was the first positive price movement on the Equity market since the 7th October 2020 (about 2 weeks),” said Motswedi researchers.
Juma and Makgatle highlighted that a large chunk of the gains in the week coincided and sometimes were an effect of transactions by a Director’s and an Associate of the same Director’s trading.
“The BSE indexes gained in the week – a welcome effect of the gain in Turnstar. The Domestic Company Index (DCI) and Domestic Company Total Returns Index (DCTRI) gained 0.39% and 0.63% respectively…” says Motswedi Securities recently released weekly update.
In the first two weeks of October, it was Choppies retail rival Sefalana’s Group Managing Director, Chandrakant Chauhan, who bought a total of 273 756 shares in a back to back market purchase transaction. In those two weeks Chauhan used over P2 million to make those transactions. The company’s share price remained flat at P9.30 during those transactions and it remains at the same price before the closure of this week’s markets.
Chauhan bought shares before Sefalana heads for their Annual General Meeting which will be held virtually via Microsoft Teams, on Friday 30 October 2020 at 16H00 for the purpose of transacting the following business. One of the major business decisions will be to ratify the appointment of Susanne Swaniker-Tettey as an Independent Non-Executive Director with effect from 1 October 2020. Swaniker-Tettey is Chief Financial Officer of De Beers and is a Chartered Accountant with 21 years post qualification experience with extensive experience in governance and compliance.
The same decision will also be on economist Mr Moatlhodi Sebabole, who should be appointed as an Independent Non-Executive Director with effect from 1 October 2020
There will also be matter worth noting like the resignation of Dr Keith Robert Jefferis from the Board with effect from 31 May 2020. Reginald Mootiemang Motswaiso also retires in accordance with the Articles of Association with effect from 30 October 2020. The same noting will be for Elias Moyo Dewah who also retires in accordance with the Articles of Association the same date. Former Vice President of Botswana, Dr Ponatshego H K Kedikilwe, will also retire at the AGM.
Prior to the presentation of its half-year ended 31 August 2020 on 1 November 2020, tourism outfit, Chobe Holdings, board announced that Group’s results before tax for the period under discussion will likely be between 140 – 145% (approximately P147.2 million to P152.4 million) lower than that reported for the comparative period ended 31 August 2019 which amounted to a profit of P 105.1 million.
Despite the gloomy news, Chobe announced that on 9 October 2020 a director at the company, Adams Tuomey Chilisa Dambe, bought 104 355 shares at P9.49 per share and the Total Value/deemed value of the transaction is P990,328.95.
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.