BSE revels in new ETF listing
The national bourse, Botswana Stock Exchange (BSE), says African Domestic Bond Fund’s (ADBF) listing is the result of its strategic objective to grow its number of instruments and diversify its issuer base.
The ADBF listed by a way of a secondary listing on the Exchange Traded Funds Board of the BSE.
Speaking during the monthly bell ringing ceremony last week, BSE CEO Thapelo Tsheole expressed gratitude to the MCB and AfDB teams for choosing to list their product on the BSE.
“We recognise the hard work and dedication the various teams displayed involving this listing across Africa as we welcome this product on the BSE,” he said.
The listing is the seventh ETF on the BSE and as the CEO said the journey started in 2010 having listed the new gold ETF. The gold ETF became the first exchange-traded fund outside South Africa which successfully listed in Botswana. He said by bringing the new ETF into the local market, they wanted to increase the number of instruments in the domestic market so that local investors can also have exposure to all those instruments.
“It is also our effort to increase liquidity in the market and that is why cumulative fleecing is then ETF trading in terms of value have cumulatively reached about P2.5 billion which we think is something we will increase going forward,” Tsheole added.
MCB Investment Management Co. Ltd, working in partnership with the African Development Bank (AfDB) launched the African Domestic Bond Fund, domiciled in Mauritius that provides access to local currency African fixed income markets in a cost-efficient, liquid, and transparent manner. The AfDB acts as an anchor investor and sponsor intending to promote local currency finance and contribute to the development of local currency capital markets across the African continent.
The ADBF ETF tracks the performance of the AfDB Bloomberg African Bond Index 25% capped, before fees and expenses, and is primary-listed on the Stock Exchange of Mauritius (SEM) denominated in dollar and the secondary listing on the BSE will be denominated in pula.
ADBF’s total return as at July 29 is 30.8% (in the dollar) and 52.2% (in pula). As a result, the Index features over 400 bonds. Given liquidity considerations and transaction costs, ADBF strategically does not invest in all the bonds but seeks to achieve its investment objective by employing a ‘stratified sampling’ approach to match the Index’s characteristics and returns by investing in a well-diversified portfolio that represents the Index.
The manager endeavours to invest only in the most liquid maturities in each market and adopt an enhanced strategy which allows it to deviate on its country weightings by up to five percent from the Index allocations to optimise liquidity and ensure a smooth operation of the fund. ADBF may also invest up to 20% in Non-Member Securities.
The participating shares are traded in the dollar on the SEM. ADBF has to date received approval for the listing of up to 10,000,000 Participating Shares on the SEM. The participating shares were due to had been admitted for a secondary listing on the BSE with effect from the commencement of trading on September 15.
The Non-Bank Financial Institutions Regulatory Authority granted the participating shares the designation of ‘local asset status’ on October 27, 2021. The participating shares will be trading in pula on the BSE.