Mmegi Online :: Bank investors suffer at the bourse
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Last Updated
Tuesday 11 December 2018, 17:43 pm.
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Bank investors suffer at the bourse

Holders of bank stocks have gone through a rough patch on the bourse losing over half of the value of their shares in the past seven months.
By Staff Writer Wed 12 Dec 2018, 08:28 am (GMT +2)
Mmegi Online :: Bank investors suffer at the bourse








On the back of a price correction that began in October last year, financial institutions continue to lose ground in the Botswana Stock Exchange (BSE) and the trend appears to be persisting.

However, in last week's trading Standard Chartered Bank share price which fell from about P27 last October to P12.50 bounced back with a 1.6 percent gain. But two other commercial banks, Barclays and FNBB continued with the losing streak.

FNBB and Barclays were among the top losers of the week going down by 3.70 percent and 3.45 percent respectively to pull down the DCI by 1.97 percent.

In the first and second quarter of 2007, bank stocks witnessed a massive rally that saw investors in Barclays' stocks get as much as P10 per share at the end of September last year. But things have changed for the investors as Barclays shares are now only worth around P5.50. FNBB shares have not been spared  either losing from just under P4 in September to the current P2.60 per share.

The life of some investors at the BSE Shares has not been made easier by the collapse of road haulage giant Lobtrans two months

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ago. This could have contributed to investor apathy to financial institutions.

Although the self-correction at the BSE began with the banks, it looks like it has spread to other counters as the DCI has been on a free fall for the greater part of this year.

Other losers last week included Prime Time, Sefalana, Diamonex and BIHL probably on the back of negative investor sentiment following some unhelpful publicity in the media recently.

Gainers, on the other hand included mining and energy companies like Aviva, Discovery and CIC Energy although the FCI still lost a marginal 0.2 percent to close the week at 2347.87.

However, despite the self-correction by most counters, stocks will be expected to bounce back very soon on the back of rising inflation coupled with relatively stagnant interest rates. Fund managers will mostly flock to the bourse if real returns begin to be threatened by inflationary pressures on the alternative money market.

Rising inflationary pressures saw the annual rate rising for the sixth consecutive time to 9.8 percent in March. But once again, the Bank of Botswana monetary policy committee decided last week to maintain the Bank Rate unmoved at 14.5 percent.

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