The Botswana Stock Exchange's (BSE) main platform, the Domestic Companies Index, is headed for two percent growth this year, its first positive annual performance since 2015.
By Wednesday, the DCI was up 1.8 percent for the year, helped by the robust performances of financial counters such as Letshego Holdings (up 94%), Standard Chartered (up 35%) and First National Bank (up 14%).
By comparison, the DCI shed 8.2 percent last year, -4.6 percent in 2019 and -11.4% in 2017. The platform, which comprises the cream of locally listed companies, last turned a positive annual performance in 2015 when it closed that year up 11.6%.
The local bourse’s performance is generally indicative of the returns available to investors in the local market as well as the overall health of the different economic sectors the listed companies represent. The DCI’s performance this year comes as the economy warms up from its COVID-19 slump, with positive growth in three quarters up to September 30, as reported by Statistics Botswana.
Stockbrokers Botswana data indicates that as at December 17, 12 of the 23 listed companies had lost ground on their shares in the period since the beginning of the year compared to 18 at the same point last year.
Earlier this year, BSE officials told BusinessWeek COVID-19 the pandemic had challenged most unlisted companies to restructure and look for avenues of sustainable long-term capital, which is important in pandemics that negatively affect solvency and access to traditional finance.
BSE Limited, which runs the exchange, has also put in place interventions to help listed companies understand the value of continued listing and the opportunities available through the platform. One of these was the publication of a paper entitled 'How Companies Can Utilise the Stock Exchange During and Post-COVID-19 Pandemic' in which the BSE highlighted the methods that companies can explore to raise capital on the BSE and to preserve cash by making distributions of securities instead of cash and structuring instruments in ways that defer cash payments.
“Listing on the BSE affords a company the ability to build a larger and heterogeneous base of retail and institutional investors, domestic and foreign,” Thapelo Moribame, the BSE’s head of market development told BusinessWeek. “Such an investor base is crucial for supporting the company’s corporate actions on an ongoing basis, some of which are aimed at raising more money while others are aimed at preserving cash already on the balance sheet.”
She added that listed companies can conduct secondary offerings of shares, or issuance of additional shares, which could be subscribed to by any investor as a way of raising capital by the company.
Meanwhile, the BSE is set for a boost with revelations that at least 10 international companies have expressed interest in the listing, as a result of engagements at the ongoing Dubai Expo.
Moribame told BusinessWeek that the BSE has met with many companies interested in listing coming from sectors such as energy, technology and education. “From the context that we got from Dubai, we are going to continue pursuing and interesting these companies in listing in our market. There are a lot of positives about Botswana that the international stakeholders see,” she said.
The investors are said to have identified Botswana as a conducive investment destination while the BSE’s technology and efficiencies allow the trading of various products and international linkages.
Under its five-year plan, ending in 2022, the BSE plans to increase the number of domestic companies listed to 30, increase the number of foreign companies listed to 15 and to grow the ratio of the BSE’s market capitalisation to GDP from 34% to 40%.