Bulls out-muscle bears in 2013 capital markets
Mbongeni Mguni | Friday December 20, 2013 12:02
By the end of November, the equity market - the local capital market’s more liquid and active component - had grown by 17.9 percent pointing to the local bourse’s best performance in recent years.
By comparison, the Domestic Companies Index appreciated by 7.74 percent last year and 8.7 percent in 2011, shed 11.4 percent in 2010, experienced a modest rise of 2.9 percent in 2009 and a sharp drop of 16.5 percent in the recession year of 2008.
At this rate, the Botswana Stock Exchange (BSE) is on course to be among the continent’s strongest performers of the year, having already been named the eighth best performing exchange in Africa for 2012.
By the second week of December, the BSE was up 19.1 percent, beating not only inflation but also property returns which are fast gaining investor attention in the market.
Equities’ growth this year has been driven by large caps such as the most heavily capitalised counter, First National Bank Botswana, which by the second week of December had risen 43 percent since the beginning of the year.
Another BSE heavyweight, Choppies, continued its stellar performance since its listing last year, rising by 56.1 percent between January and December 13, 2013.
While the BSE shone in general, it also recorded an unusually high number of actual and planned de-listings, including one of the first on the Domestic Companies Index in three years.
RPC Data, the sole ICT firm listed on the BSE, delisted on December 12, following shareholder approval of a director-led buyout scheme. The firm, which debuted on the local bourse on November 1, 1999, has been in and out of the red for several years due to its dependence on government contracts and the fickle nature of the technology sector.
Another de-listing involved Australian junior miner, Aviva, which left the local bourse on September 27, following the acquisition of its sole Botswana exploration property by fellow Aussie junior, African Energy.
In the third week of December, the local capital market was stunned by news from leading beverage producer, Sechaba Brewery Holdings, that it was weighing its continued listing on the BSE.
The sole listing in 2013 was that of majority-citizen owned coal development firm, Shumba Coal, which debuted on April 08 on the BSE’s venture capital board.
During 2013, government continued to be the biggest participant in the fixed income market, conducting four successful auctions during the year and in the process raising P2.85 billion and accounting for market activity.
Each auction was characterised by robust bidding, particularly for the shorter paper in the last auction of the year, and sliding yields which analysts believe are indicative of investor confidence in inflation trends and the economy’s medium-term performance.
An 18-year bond, BW011, debuted at the September auction carrying a 7.75 percent coupon. At the auction, BW011, attracted 32 bids worth P835 million, where it had an initial face value of P200 million.