BSE retreats after record-busting week

Staff Writer | Tuesday June 12, 2012 00:00

 

In yesterday's trading session, just under 460,000 shares worth P781,952 were traded on the Domestic Companies' main board, with active counters including Letshego, Furnmart, Engen and the Funeral Services Group (FSG).The volumes are a step back from last week's rally, during which 14.4 million shares valued at P41.5 million shares exchanged hands, compared to 3.4 million shares worth P7.6 million the week prior. Last Wednesday alone produced the highest trades seen in a single day this year with P35.3 million in shares changing hands.Last week's volumes drove the BSE's flagship Domestic Companies Index (DCI) to its highest level this year, having risen by 4.23 percent since the beginning of the year.

Indicative of the stronger volumes on the local bourse, the NewGold ETF, an investment instrument based on the price of gold, ran out of units last Monday, as investors snapped up holding in the asset.The robust volumes on the BSE came as Bank of Botswana data showed that offshore investments of local pension funds were at a five-year low, with asset managers moving away from the volatility on international markets caused by the Eurozone debt crisis.

Yesterday, trends returned to normal on the BSE, with two of the DCI's gainers last week losing ground while institutional investors, usually perceptible by their large volumes, were also largely absent. The DCI yesterday morning consequently lost a point from its high last Friday.The NewGold ETF also lost ground from its highs last week, shedding P5.35 possibly on the back of profit-taking by investors excited by last week's high. Motswedi Securities' analyst, Garry Juma, said last week's high volumes on the local bourse were the result of the periodic actions of fund managers.

'The high volumes from last week were to do with portfolio rebalancing by institutional investors,' he said. 'Asset managers periodically look at their portfolios, the proportions between bonds, cash and equities and their exposure.'You can see that institutional investors have taken a break from the market and volumes show that it's retail investors who are active.'We do not expect last week's volumes to happen everyday.'

Observers expect the local bourse to increasingly become popular with local and international fund managers as highly regarded stock exchanges in developed markets come under pressure from the Eurozone debt crisis.'There are lower returns offshore because markets there are performing badly, companies collapsing and a host of other economic troubles,' BSE product development manager, Thapelo Tsheole said last week. 'To correct that will take a lot of time and money. As a result, funds are moving to developing countries and we are seeing increasing numbers of foreign participants.'