The Botswana Stock Exchange's (BSE) main platform, by Wednesday afternoon, held its position as the world's only market with positive returns, as the coronavirus continued crushing all other global exchanges.
Since late January, the pandemic has played havoc with global equity markets, as investors have rushed to dump their holdings either already experiencing earnings losses or anticipating them.
Major equity markets such as the Dow Jones, S&P 500 and FTSE 100 and regionally, the Johannesburg Stock Exchange (JSE), have all fallen deeply, wiping off trillions of US dollars in value for investors. By Wednesday afternoon, the Dow Jones was down 27% in the year-to-date, the S&P 500 down 24%, FTSE 100 down 27% and the JSE down about 25%. By comparison, the BSE’s Domestic Companies Index (DCI) was about 1.5 percent up for the year to Monday. The DCI retreated on Tuesday to a year-to-date gain of 0.87% due to losses in Letshego and First National Bank Botswana, which shed five thebe each.
Letshego is the highest gainer on the DCI this year, putting on 26.8% since the New Year, while FNBB is the second highest with gains of 3.5 percent as at Wednesday afternoon.
“This (positive returns) means that existing investors have not lost value from their investment as yet as a result of COVID–19,” BSE Limited head of market development, Thapelo Moribame told BusinessWeek. “As the situation regarding the pandemic is ongoing we don’t know how much the market will be affected in the
She added: “The stock market has remained stable owing to the comparative and competitive advantages that the market has. “Institutional investors tend to take a buy and hold strategy to investing. Again the country has abundant capital from pension funds that is chasing fewer assets, therefore in some instances we have seen international investors selling, however the demand from local investors has so far been able to cushion that.
“It is worth noting that investors respond to what affects them and the stability of the market reflects their sentiment as we have a good mix of local and international investors.
“However, this is not to say that the situation cannot change as this pandemic is still unfolding.”
Market analysts said the BSE’s lofty position atop global markets was indeed in danger of ending soon. “In our view, the BSE has remained positive largely due to muted activity in the market,” Stockbrokers Botswana research analyst, Donald Motsomi told BusinessWeek.
“If activity is low, price movements are rare.
“However, the DCI fell by 0.6 percent yesterday (Tuesday). “It is only a matter of time until we are in the red year to date as well as we continue to see a significant number of offers and only a handful of bids for shares across the board.”