Blue chips drag BSE southwards
Isaac Pinielo | Tuesday April 25, 2017 16:29
Trading in the domestic bourse depreciated in the first quarter of 2017, reaching 9225.22 points, down 1.9% on the previous quarter.
According to a BSE market performance report, the domestic company index (DCI) shed 1.9% to 9225.22 points with the market slowing in the first two months of 2017 before recovering in March.
Market analysts attributed the decline in the performance of the market in the period January 1 to March 31, 2017 to the losses on blue chip equities.
During the quarter, Sechaba Brewery Holdings, Sefalana Holding Company, Furnmart, FNBB, and Letshego, dropped by 22.2%, 17%, 7.1%, 7.1% and 5.7% respectively.
Researchers at Stockbrokers Botswana said amongst the biggest news that moved the market this quarter was Sechaba’s loss of Kgalagadi Breweries Limited’s bottlers agreement with The Coca Cola Company.
They asserted that these are warning signs that with the ABInbev acquisition of SABMiller, investors can expect extended periods of uncertainty surrounding the beverages giant.
“We anticipate a lot of investors will be in ‘wait and see’ mode, while any further changes from the acquisition could potentially have a material and adverse effect on the group’s business,” Stockbrokers said.
With Sefalana being another big loser for the quarter, the analysts said although with relatively flat results released during the quarter, they believe that the loss in value was largely due to a general de-rating of the retail stocks, which also hit local competitor, Choppies Enterprises, in the previous quarter.
“We will be closely watching the newcomer Botswana Telecommunications Corporations Limited (BTCL) during the second quarter of the year, which is trading under cautionary on anticipation of significantly higher year-end results,” Stockbrokers said.
Motswedi Securities research analyst, Garry Juma said the decline in the liquidity of the BSE was influenced by various factors such as the slowdown in demand for shares, especially for markets in Africa in general.
He added that the increase in the US interest rates has led to loss of appetite in emerging markets, adding that developments happening closer to home, in South Africa, dampened investor confidence in emerging markets.
“He further noted that it is going to be a tough year in terms the gross domestic product (GDP) growth, economic growth and the market in general.
He, however, said there is a silverlining that will come through the BTCL and Barclays Bank Botswana, which have been the biggest gainers.
Top gainers for the quarter were BTCL (+30.6%), Barclays (+13.1%), NAP (+7.1%), Choppies (+6.2%) and Chobe (+4.3%).
Meanwhile, the BSE said trading activity improved during the quarter, with turnover up 45% to P655.6 million from P452.5 million in fourth quarter of 2016, and volumes up 41% to 177 million shares from 125.6 million shares in the fourth quarter of 2016.
The Domestic companies’ capitalisation was P45.6 billion as at March 31, 2017, while valuations seemed reasonable with weighted P/E ratio of 15.7x and a dividend yield of 4.6%.
As at March 31, 2017, the BSE had recorded a turnover of P532.80 million from a volume 173.9 million shares traded.