Bulls Set to Persist On BSE (18 September 2007)

Brian Benza
The Botswana Stock Exchange is the best performing investment vehicle on the financial markets on a year-to-date basis, growing at a higher rate than other investment instruments.
Buoyed by good company results and corporate restructurings, the DCI has powered on 57 percent, while the FCI has risen 23.91 percent and the All Share Index firmed by 25.38 percent.

The bourse performance has also beaten inflation in the review period.

In the first six months of the year, the annual inflation rate has fallen to the 7 to 8 percent range, rendering strong positive real returns for investors.

Investors on the bourse have raked in average real returns of close to 50 percent on the domestic board and over15 percent on the foreign counters.

Money markets rates, on the other hand, have been hovering around the 11 percent to 12 percent range in 2007.

Investment analysts reckon firm earnings posted by the listed counters gelled with various corporate restructurings, such as acquisition and expansion programmes, led to firm demand for share process in the period under review.

A recent report by Stockbrokers Botswana notes that the bulls that have been running for the past two years and are not showing any signs of slowing down. Most mining stocks on the foreign board have also performed exceptionally well, although analysts believe gains are now slowing as investors wait for exploration results on some reported copper deposits.

"More expectedly as explorations continue, trade in the mostly venture-capital mining stocks on the foreign dual-listed board has also increased, and by significantly higher margins," says the report.

On market capitalisation, as at the end of July 2007. FNBB was the market leader, anchoring 25 percent of the domestic counters, followed by Standard Charted Bank with 22 percent, and Barclays sitting in third position with 21 percent.

Although the bourse has been hit by two de-listings this year, Alexander Forbes and LionOre, there continues to be a strong appetite for shares.

Meanwhile, last week's trading on the bourse was mixed as the DCI fell marginally by 0.18 percent to close the week at 9754.56. The FCI, on the other hand, firmed by almost two percent powered by gains in heavy weight counters like Diamonex which surged 6 percent, AF Diamonds (1.04percent) and AF Copper (0.73percent).

Banks once again topped the decliners for the second week running with Standard Charted softening by 1.82 percent and FNBB shedding 1.52 percent.

This is despite the fact that for the six months to June 2007, commercial banks registered quality profits, which should be a positive development for their stocks.