Retail investors rise 200% on BSE
Brian Benza | Wednesday October 8, 2014 17:09
According to the BSE 2013 Annual Report released this week, local individual contribution to turnover in 2013 was 8.7 percent rising by nearly threefold over the past five years from three percent in 2008.
The BSE registered a record turnover of P2.3 billion in 2013, meaning retail investors traded shares worth P200 million on the bourse in the year.“Over the past three years, local individual investor contribution to turnover has averaged 8.4 percent.
The growth in retail investor participation is a welcome indication of financial inclusion of citizens in the economy of the country. “In 2013, local individual investments in the BSE more than doubled and totalled P201.7 million as measured by their contribution to turnover, an increase of 111.4 percent in comparison to 2012,” read the report.
Institutional investors have traditionally dominated trading on the BSE, crowding out individuals in the process.
However, BSE CEO Hiran Mendis said if a comparison was to be made of individual investor participation in the Capital Market, Botswana’s involvement in the stock market is still way behind countries such as Mauritius and Asian emerging markets.
According to Mendis, the main reason for this is the lack of financial awareness and opportunities for investment.
Local institutional investors accounted for 59.8 percent of turnover in 2013, maintaining their dominant position from 2012.
In 2012 local institutional investors contributed 47.5 percent to turnover from 44.7 percent in 2011.
“Although, institutional investors still “crowd-out” retail investors in periods of rising liquidity, the BSE is happy to note that turnover generated by individual citizens, in monetary terms, increased significantly in the year under review relative to 2012.
This is indication of increased participation of local individual citizens in the stock market,” said Mendis.
The Botswana Stock Exchange (BSE) said it reached several milestones in 2013 as the bourse introduced not only new products but also achieved recorded share trading turnover and price growth.
According to the BSE 2013 annual report released this week, BSE registered the highest turnover levels since its inception in 1989, recording total turnover of P 2.3 billion, or P 9.3 million per day.
“This is 2.6 times the turnover recorded the previous year and approximately twice the turnover generated on the BSE in 2008 (highest up to 2013).
“Most importantly the Automated Trading System (ATS) has helped propel the BSE forward and generate the record turnover,” read the report.
Apart from the turnover, the Domestic Company Index (DCI) also reached its highest level since November 2007, recording a significant increase of 20.5 percent in 2013.
The DCI measures the performance of the bourse’s mainstream 23 counters listed on the domestic board. The bourse has a total of 34 listed counters including 11 on the foreign companies.
According to the report, the BSE also successfully launched three bond indices in April 2013. These were the; GovI – a government bond index, CorpI – a corporate bond index and the BBI which is a composite index comprising both government and corporate bonds.
Another achievement in 2013 was the notable rise in the number of Central Securities Depository (CSD) accounts opened with the number of accounts increasing by 13.5 percent to 20,027 compared to 17,638 in the previous year.
“This highlights the current growth of Botswana’s equity market and the continued rise in individual investor interest and participation.
“This rise is furthermore indicative of the effectiveness of the BSE’s market development initiatives during the year which strived to garner as much participation from stakeholders as possible,” stated the report.
The BSE also noted that banking was the dominant sector in 2013, contributing 8.1 percentage points to the growth in the DCI.
The contribution by the Banking sector is mainly attributed to the appreciation in the share price of FNBB. Choppies was the second best contributor to the DCI, with a contribution of 3.9 percentage points. Letshego, which was the most liquid stock in 2013, was the third highest contributor at 3.3 percentage points.