BSE booms despite economic slowdown
Mbongeni Mguni | Monday July 28, 2025 10:05
Typically, stock exchanges are viewed as bellwethers of the economy, as they are essentially a pick of the major firms in different sectors whose performance reflects general trends. The economy contracted by three percent last year due mainly to mining and is expected to dip again this year, although the non-mining sector remains generally resilient.
According to an update released by the BSE last week, the local bourse recorded a historic first half with total trading across all listed instruments surging to P7.1 billion compared to P3.6 billion in the first half of 2024, a 96.9% increase.
In terms of equities, turnover reached P4.7 billion in the first half of the year, from P802.8 million over the corresponding period last year, with trading activity led by First National Bank Botswana (P812.9 million), Sefalana (P523.9 million), and CA Sales (P375.0 million).
At P4.7 billion, the boom in the first half of the year surpasses the total turnover seen in equities for the full year of 2024 which was P1.7 billion.
Turnover in bond markets declined to P2.1 billion in the half year, from P2.6 billion in the corresponding period last year, whilst trades of Exchange Traded Funds (ETF) surged by 80% year-on-year.
BSE officials said several factors were driving activity on the BSE, both in terms of prices and volume of trades.
“Revised regulations in 2023 have prompted a shift in pension fund investments, and pension funds continue to re-align and re-allocate their portfolio assets,” officials stated. “With equity markets performing strongly for years, institutions are shifting strategies, selling some holdings to optimise holdings against prudential thresholds and benchmark allocations. “Even individual investors are participating more actively, buoyed by low inflation that contributes to competitive real returns. Significant inflows into ETFs by retail have risen, particularly in NewGold ETF that has continued its previous years’ rally into 2025.”
The pension fund regulatory changes include the requirement to increase the percentage of assets held locally in a phased form until December 2027, as well as new thresholds for the different asset categories.
BSE officials said the first half boom meant more liquidity and more opportunity for investors, as the higher turnover meant that it is easier to buy and sell without material price drops, giving retail investors more flexibility.
“Institutional trades and broad-based participation helps to stabilise price swings, smooth performance, and improve liquidity across the entire bourse. “In the current low inflation environment, this presents entry opportunities for other investors and profit-taking opportunities as well, potentially with returns above the low inflation,” officials emphasised.
The rise in ETFs availability, especially with new listings in the pipeline, opens doors to international markets, without needing specialised offshore investment platforms, officials said.
“The BSE anticipates to close the year with new ETFs listings that provide more diversity to complement the currently listed ETFs,” the bourse’s officials stated.
The exchange described the first half of the year as a “historic turnaround in Botswana’s capital market,” adding that retail investors are now entering a deeper, more liquid, and increasingly diverse market.
The activity on the BSE in the first half flies against the traditional illiquidity where institutional investors hold onto their shares and take long views, drying up trades.