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BSE falls in Q1, after world-beating rally

MBONGENI MGUNI
Andrew Okai Letshegp Group CEO
The Botswana Stock Exchange's main platform, the Domestic Companies Index (DCI), ended the first quarter of the year down 0.09 percent weaker, weighed down by a general downtrend in several major stocks.

While the DCI marginally lost value in the first quarter, its performance was better than other regional exchanges with the JSE All Share shedding 22.9% and the Stock Exchange of Mauritius Equity Index dropping by 27.9%. 

For most of the first quarter, the DCI maintained a positive performance despite a global wipeout of equities caused by the coronavirus (COVID-19). By March 20, the DCI was up 1.47 percent for the year, led by gains in counters such as Letshego and First National Bank Botswana. 

However, the DCI fell 1.54 percent between March 20 and 31, with both Letshego and FNBB reversing the gains achieved since the beginning of the year. 

Letshego began the year at a good tick, its share price gaining 27% by the end of February, as investor confidence returned on the back of solid results and consolidation of board and executive positions. However, the microlender’s pace slowed for the rest of the quarter, as Letshego’s share price fell by 5.6 percent between February 28 and March 31. The microlender, however, still finished the first quarter as the DCI’s biggest gainer with a 19.7% appreciation of its share

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price. 

FNBB, meanwhile, gained 3.5 percent between January and early February, before ending the quarter 3.5 percent down from its level at the beginning of the year. The bank’s decline for the quarter was associated with profit-taking after its rosy spell was triggered by advice to investors on January 28 that profits for the six months ended December 31, 2019 would be higher by up to 15%. FNBB eventually posted a 13% increase in pretax profits for the period to P555 million. 

Another counter, Chobe Holdings, ended the first quarter 3.6 percent up, before seeing its gains disappear after government instituted an 18-country travel ban due to the coronavirus. The ban was extended to neighbouring countries leaving the local tourism sector reeling from cancellations.

Since the end of March, Chobe’s share price has fallen 4.3 percent.

In a commentary released last week, the Botswana Stock Exchange Limited (BSEL) noted that turnover for the first quarter was P185 million, a drop of 47% from the corresponding period in 2019. 

“The number of shares traded amounted to 81.7 million compared to 156.1 million shares in quarter one of 2019,” the Exchange stated.



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