BSE to automate in order to attract more listing

WANETSHA MOSINYI
Correspondent | Friday August 10, 2007 00:00

 

The BSE's Listing and Trading Manager, Bopelokgale Soko, disclosed in an interview that the bourse recently signed a contract for the installation of a Central Depository System (CDS) that will help boost liquidity.

 
The CDS will house shares in an electronic system to enable them to be transferred through a computer instead of the current arrangement of certificate issuance.
Soko acknowledges that liquidity has been one of the challenges facing the BSE and outlined various problems that contribute to it.
She identifies one of them as the lack of the right infrastructure, such as automated trading.

 
'Once implemented, the CDS will definitely increase liquidity and encourage more people to trade,' Soko says.
Foreign companies that are dual-listed don't use the outdated paper certificate shares format on other bourses, but when they trade in Botswana, they have to transfer shares.
'It's costly to them,' says Soko.

 
She says after installing the CDS, the BSE will approach its backers for funds to implement use of the automated trading system.
Soko identifies another problem as the unavailability of shares for trading:  'Sometimes there are not enough shares because most shares are in the hands of fund managers who mostly prefer to buy and hold shares.'

Yet another concern is the slow rate at which companies list on the BSE. For example, not even a single company has listed this year. The last to list was the Investment Management Company, Imara, and that was in October last year.
Companies also continue to de-list from the BSE, the latest to jump ship being Alexandra Forbes.

In similar vein, there is uncertainty regarding mining giants LionOre International, which was recently taken over by Russian company Norilsky Nickel.
Soko says the company has not communicated their position regarding its continued listing on the BSE or otherwise.

It is also a bit of a problem that most companies listed on the BSE are foreign owned backed by their parent companies outside Botswana, she says. 
'Take for example, Barclays. They are 75 percent owned by Barclays Plc, which means they don't need the market to raise cash because they are backed by their parent company.

 
'It is unlike in South Africa where most companies are locally owned, so they go into the market to raise cash.'

Even so, Soko is optimistic, especially after their recent Investment Forum, which she says, sparked a lot of inquiries about the services offered by the local bourse.
Even though they haven't extended their marketing drive to other parts of the region and internationally, there are constant inquiries about the local bourse.

'Botswana has some advantages compared to other African countries because of its political and economic stability, something that attracts foreign investors.
The BSE has embarked on a countrywide marketing initiative to educate Batswana on the stock exchange.

 
Soko took the opportunity to warn unsuspecting people of bogus companies that go around claiming they can buy shares for them on the BSE, which she says is not possible; there are only three registered brokers who are allowed to sell and buy shares on behalf of clients.

The BSE has 30 listed companies composed of 19 on the Domestic Company Index (DCI) and 11 on the Foreign Company Index (FCI).