Investors flock back to buy shares on BSE

Staff Writer | Wednesday February 3, 2010 00:00

 

Since the beginning of the year, the bourse has traded northwards coming from the profit-taking that characterised the market at the end of 2009.

Yesterday, the mainstream Domestic Companies Index (DCI) pushed further ahead, adding 0.06 on top of Monday's 1.18 percent gain.

Pushing the index Northwards in yesterday's trade were gains in counters such as Sechaba, FSG, Aviva ,Prime Time and  Sefalana. Sefalana Holding Company Limited last week released a subdued set of interim results for the six months ended 31 October 2009, as the challenging macroeconomic environment resulted in lower spending and squeezed volumes and margins. Sefalana Cash & Carry Limited (Sefcash) turnover dropped by 4 percent due to the introduction of the 30 percent alcohol levy, a significant reduction in cross-border trade with Zambia and Zimbabwe.

In last week's trade Market, activity also improved on the back of significant deals traded in BIHL, FNBB, Letshego and Turnstar as institutional investors strategically position their holdings ahead of the 2009 year end financial results.

Even though the year 2010 is envisaged to be a challenging year, it will be much better than 2009 as the recovery of the global economy will filter through to the local economy. According to the Bank of Botswana report released early this month, Botswana's overall business confidence has increased for 2010 on the back of a global economic recovery.

'Against this background, we are observing an increase in appetite for stocks as investors are now more confident in both domestic and international economic conditions,' says Gary Juma of Motswedi Securities.For the week 5,049,163 shares, worth P26,978,204 exchanged hands on the Botswana Stock Exchange, a big improvement from 2,487,278 shares, worth P18,140,522 that were traded the previous week.

African Diamonds topped the list of gainers, up 6.3 percent to 505 thebe, followed by Turnstar which closed the week 4 percent higher at 157 thebe.  Chobe added 3.7 percent to 223 thebe, while Funeral Services Group (FSG) rose to a new high of 166 thebe.  Other gains were in PrimeTime and Letshego.  On the downside, African Copper lost 12.5 percent to 70 thebe, followed by Sechaba which weakened to a new 52-week low of 1,260 thebe and Discovery Metals which ended the week 1.6 percent softer at 374 thebe on some profit-taking.

Going forward, Stockbrokers Botswana believe that the market consensus is mixed between the optimistic, supporting the view of a 'V'-shaped recovery, versus those who believe that uncertainties surrounding the medium term look prevail and thus gravitate towards a more cautious 'U'-shaped recovery.

'We hold the view that locally, recovery will be slow. While diamond production has resumed, revenues still remain well below pre-crisis levels due to low demand for luxury goods as consumers are now vigilant with their spending patterns and leaning towards savings.

'Challenging economic conditions are expected to continue to affect forward earnings multiples for most counters. Market sentiments seem to be moving towards the more stable large caps which offer higher dividend yields. 'Careful stock-picking remains important particularly when it comes to smaller caps which tend to be overlooked in favour of blue chips,' reads a report from Stockbrokers Botswana.