Blue chips drag BSE southwards
Brian Benza | Wednesday August 17, 2016 18:00
After shedding 2.2% last week, the DCI lost another 0.11% on Monday strengthening a southwards trend that has characterised the market since the beginning of the year.
This year performance of the bourse is a direct contrast to 2015 where the benchmark index was 16.9% in the black by the second week of August 2015.
In a surprise trend that has defied experts’ chart analysis of stocks performances, what first appeared to be profit taking by speculative investors two months ago on the market’s large caps has evolved into a persistent bear run.
Headlining the 10.95% year-to-date softening of the DCI are six large caps that constitute over 52% of the total market capitalisation. After losing eight percent last week alone, micro-lending company, Letshego has registered the largest losses on a year-to-date basis shedding 31% since January.
“The stock has fell 31% since the beginning of the year, seemingly to no particular reason much to the bemusement of investors. Could it be over supply? The stock has traded over 69 million shares since April and we are still seeing sellers, however it is difficult to call it profit taking anymore. We expect its upcoming result presentation to be highly attended as investors will need some assurance that all is still well within the group,” said analysts at Motswedi Securities.
Other stocks that have recorded the largest losses this year include bankers, Stanchart and FNBB, Choppies, BTCL and Furnmart.
The banking sector continues to operate under tremendous pressure, with prevailing interest rates and reduced squeezing down on margins. FNBB announced that earnings for the year will be significantly lower for the year, and the news was followed by some sell-off and a 14-thebe price drop over last week.
The FNBB stock is down 20.2% since January this year. Banking peer, Standard Chartered has been worse off, falling 29.5% on a year-to-date basis.
Last week’s decision by the Bank of Botswana to further cut the Bank Rate to 5.5% will further exacerbate the bankers plight with a further squeeze on interest rates margins expected.
While FNBB and Stanchart have been battered on the bourse, banking peer Barclays appears to be enjoying a good run on the bourse with its year-to-date trading standing at five percent in the black.
This week, Barclays advised shareholders to expect profits for the half-year to June 2016 to be significantly higher than in the previous period.
Furnmart and BTCL both lost five thebe over the week to reach new 52 week lows, the furniture company’s lack of profitability in the last financial year, coupled with increased competition and regulation have weighed hard on the share price, pushing it to its lowest levels since its share split in 2011, as it closed at 85 thebe a share, 22% lower than the rise in January 2016.
BTCL closed the week at 86 thebe, 14% lower than the listing price of P1.