BSE ends half-year in the red
Isaac Pinielo | Friday July 7, 2017 17:25
The bourse’s performance as measured by the benchmark, Domestic Companies Index (DCI) stood at 9,244.23 points on June 30, down 1.66% on a year-to-date basis and 8.5% lower over the past 12 months.
A market analyst at Motswedi Securities, Moemedi Mosele attributed the bearish streak to large cap stocks, which he said, continue to disappoint for a number of reasons.
He noted that Sechaba Brewery Holdings Limited was the largest loser for the year, down 25.9%, following the AB-Inbev SAB Miller merger, that led the Coca-Cola Company into terminating its bottling and distribution agreement with the company.
According to Mosele, First National Bank of Botswana and Letshego Holdings Limited continued to trade under pressure, with a lot of selling coming from foreign investors, who have been observed to be moving funds to the US, on the back of improved interest rates abroad. “The selling pressure has seen both counters extend losses for the year,” he said. In addition, he said, Sefalana Holding Company suffered from poor demand on the market following their rights offer late last year, and weaker interim results that saw investors approaching the stock with caution.
However, Mosele stated that some stocks carried their positive momentum into the year. Barclays Bank of Botswana continues to rally, closing the half year 17.1% higher, while New African Properties (NAP) climbed 9.2%, and Chobe Holdings Limited traded 8.6% higher, all backed by demand and great financial performance in the previous year.
He further said the outstanding recovery and performance of BTCL to close the first half of the year 44.9% higher at P1.42, has been the highlight of the year.
The telecommunications counter closed the half-year 42% higher than its listing price of P1.00 just over a year earlier. For the year, the company declared a strong dividend for the year, adding 9.6% in dividend yields for investors, following a revision of the company’s dividend policy to payout 50-65% of earnings as dividend.
Earlier on, some stock market analysts painted a bleak outlook for the domestic bourse, stating that the spell of tight liquidity that has beleaguered the BSE since the beginning of 2017 is not likely to ease any time soon. Motswedi Securities head of research, Garry Juma said they expect the trend to continue for the better part of this year due to the prevailing mismatch between supply and demand in the market.
BSE market development manager, Thapelo Moribame acknowledged that there has been a general decline in liquidity across global markets.