Investors cautious as earnings season kicks off
Mbongeni Mguni | Monday September 15, 2025 10:36
Listed companies are expected to begin reporting their interim and full-year results this month, and already, several major counters have announced that they expect lower returns. Absa Bank Botswana expects its pretax profits to be down by as much as P167 million for the six months to June 2025, whilst Standard Chartered Bank Botswana expects profitability to be lower by as much as P127 million. Absa is due to report on September 16, whilst SCBB will unveil before September 30.
The Botswana Stock Exchange has experienced robust growth since the pandemic ended, with the repatriation of pension funds and a warming economy, pushing prices up and boosting trading activity.
According to figures seen by BusinessWeek, in the last five years alone, the Domestic Companies Index has risen by nearly 52%, presenting one of the strongest returns across any asset available in the local market.
Analysts at Ninety One, a leading asset manager in the country, said the bull market that listed equities have enjoyed in recent years was under threat.
“There are very few companies that have reported so far for the 2025 financial year, and as they report, we will continue to update our models, but based on the few cautionaries that we've since seen, it actually seems apparent to us that we're expecting actual earnings to be negative relative to last year or lower earnings relative to 2024,” Leano Babitse, analyst at Ninety-One analyst, said in a recent briefing.
She added: “It does appear as though earnings are likely to be even weaker than what we are currently anticipating based on some of the cautionaries that we're getting so far.”
Ninety One, which is one of the country’s largest fund managers with assets of about P13 billion, said it was adopting a cautious approach to its investments in equities.
“It's still early days from a reporting standpoint, and we'll continue to monitor and update our models as the companies report,” Babitse said. “But we're certainly a lot more circumspect, a lot more cautious, a lot more concerned about the trajectory of earnings growth, at least for 2025 and 2026.”
She said Ninety One had been engaging with management teams of the companies it is listed in since the end of last year, into the beginning of this year, and there were concerns being expressed.
“The sort of themes that we're getting from management teams were around the tough operating environment that they were seeing. “We heard words such as tough, such as difficult, such as weak, used to describe the operating environment that the companies were witnessing. “So in terms of what we think about whether the strong growth that we saw in 2024 is sustainable, at this point in time, we're largely circumspect,” said Babitse.
She added that from the second half of last year, it had become “very apparent” that the macroeconomic situation is adversely impacting both the real economy as well as the financial economy.
The economy contracted by three percent last year, and whilst the Finance ministry initially expected a three percent rebound this year, technocrats have now settled on a 0.4 percent contraction.
On Wednesday, First National Bank Botswana chief economist, Gomolemo Basele, said the contraction was expected to be deeper than 0.4 percent.
“Following from the three percent contraction last year, we expect the economy to contract by a further one percent this year, driven by some of the announcements that we've also seen in terms of local mining production also being negatively impacted by the global outlook,” he said.
Basele said inflation was expected to average 3.2%, within the central bank’s objective range, supported by stable fuel prices. There were, however, threats from the changes to the pula exchange framework, which have triggered a period of price hikes in the economy two months ago.