BSE expects more listings despite COVID-19 impact
The Botswana Stock Exchange (BSE) expects more equity listings before the end of the year, underpinned by technological advances in the platform’s infrastructure and the need by unlisted companies for long-term capital.
While the pandemic has impacted the BSE’s overall performance, with individual companies’ profits dented and returns declining, the Exchange in mid-April broke the fall in the Domestic Companies Index (DCI) seen since March last year when COVID-19 broke out in Botswana.
The DCI, which is the BSE’s flagship platform housing the equities of major firms, dropped by about 13% between the end of March last year and early April this year but has risen by about three percent since then.
This week, BSE CEO, Thapelo Tsheole told a webinar on unlocking Botswana investment potential, that the pandemic has challenged most unlisted companies to restructure and look for avenues of sustainable long-term capital, which is important in pandemics such as COVID-19 that negatively affect solvency and access to traditional finance.
“From a listing’s perspective, the BSE is working hard to boost liquidity as it anticipates a ‘strong pipeline’ of new domestic equity listings including multinationals,” he said.
“These listings are expected before the end of 2021 and will serve to increase turnover and volume levels and ultimately increase the number of listed companies on the bourse.”
The BSE, he said, is fast-tracking several initiatives to attract and retain listings as well as ease trade on the exchange. These include virtual engagements with listed companies to discuss concerns, production of a listings value proposition and listings guide, partnerships with and CNBC Africa as well as the roll-out of the Tshipidi Mentorship Programme where SMEs are handheld towards a possible listing.
However, it is in technology that the BSE expects to drive further expansion for the Exchange.
“The BSE has embarked on projects that will pave the way for improvements that will be made to our current technological infrastructures to streamline our processes,” Tsheole said.
“These projects include the implementation of a new clearing and settlement system that comes with new functionalities such as securities borrowing and lending, management of the Settlement Guarantee Fund, IPO processing, E-Voting for listed entities, repo management and online investor access, amongst others.
“Further, to complement this new CSD system, the BSE will also be upgrading the current Automated Traded System to increase capacity that will ensure that our trading system is able to handle larger trades.
“The upgrading of this system supports our strategy to grow the market and increase the average daily turnover levels to P18 million per day.
“Both of these projects are expected to be concluded before the end of the year.”
On the investor side, Tsheole noted that while the COVID-19 had impacted the BSE’s overall performance, the majority of the companies had sustained dividend pay-outs even amidst declining profitability and this had cushioned the adverse performance of share prices.
“Thus, while prices were declining on aggregate, investors were still able to benefit from the dividend pay-outs and this helped to reduce the overall decline in price returns,” he said.
In the six months to July 31, the biggest investor contributors to equity turnover were local and foreign companies at 65.5% and 22.1% respectively.
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1.85
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1.85