2010 was sluggish year on the bourse

MBONGENI MGUNI
Staff Writer | Friday January 14, 2011 00:00

According to available statistics, at 6412.9, the DCI ended last year 11 percent lower than December 2009, year closing levels last seen in 2006.

Market capitalisation (the total value of a listed company accruing to shareholders) also dropped to its lowest level since 2006 with the DCI's 21 listed companies worth P26.2 billion on the BSE. The figures represent an eight percent drop from the December 2009 DCI market capitalisation of P28.5 billion.

While both market capitalisation and the DCI fluctuated throughout 2010, data shows that both indicators peaked in the March reporting period and were generally on a downward trajectory for the rest of the year.

Market activity across the March, June and September reporting periods was more subdued than in previous years, with the DCI recording a sharp slide from November at around 7250 points to less than 6412.9 at year-end.

Motswedi Securities analyst, Garry Juma, said the BSE's performance in 2010 was not likely to worry institutional investors who hold long-term views and are accommodative of seasonal fluctuations.

He explained that the performance of the market was heavily influenced by the festive season sell-off during which retail investors dumped their shares for holiday cash, in the process sending share prices into a virtual freefall.

'There was a major sell-off especially towards November/December, but volumes were thin, indicating that these were retail investors selling off their shares ahead of the festive season,' he said.

'Unfortunately, that pressure was not matched by the demand side because most of the institutional investors who are able to buy in bulk took a breather ahead of the festive season, which resulted in prices falling. The sell-off was a short-term event and we would be worried if the same trend had continued into January this year, which it has not.'

By Wednesday, the DCI had recovered by 2.6 percent as investors rush for banking stocks ahead of the counters' full-year reporting period in February/March.

Although the performance of the market was weak, the BSE recorded several milestones during 2010, welcoming two new counters to the DCI and an inaugural Exchange Traded Fund.

However, during the year, the BSE's main committee was forced to de-list DiamonEx for failure to restore the counter following its suspension in February 2009.

In contrast to the DCI, the BSE's Foreign Companies Index (FCI) thrived during 2010, ending the year 18 percent higher at 1 673.9 points. The capitalisation of foreign companies rose in 2010, equally swelling by 18 percent during the year, with the nine counters valued at P408.3 billion.