BSE market value declines by P5billion

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  • Domestic companies market cap down by P4bn
  • Foreign companies value down by P1bn
  • Delistings drag BSE market value

Gazette reporter

The market capitalisation of the Botswana Stock Exchange Limited (BSEL) has taken a dip by over P4 billion, owing to the shrinking value of the listed companies, it has emerged.

At the first BSEL Opening bell held last Friday, Chief Executive Officer (CEO) Thapelo Tsheole revealed in a presentation that the market value of the BSE declined for the past five years. Market capitalization refers to the total Pula market value of a company’s outstanding shares. Commonly referred to as “market cap,” it is calculated by multiplying a company’s shares outstanding by the current market price of one share. The investment community uses this figure to determine a company’s size, as opposed to using sales or total asset figures.

In 2014, domestic companies listed on the BSEL were valued at P46.209 billion, while the foreign companies listed valued at P371.9 billion. This brought the total market cap of the BSEL to P418.1 billion. The BSEL total market capitalisation would further shoot up to P421 billion in 2015, after the value of companies listed on the domestic board leapfrogged to P50.213 billion, while those on the foreign board totalled P370.8 billion.  Further BSEL’s market cap in 2016 remained flat as compared to 2015. It was valued at a total of P421.3 billion. Domestic companies were valued at P46.5 billion while the foreign companies stood at P374.3 billion.

The year 2017, was unpleasant for the BSE. Total market cap declined to P418.1 billion. A major decline was recorded at the domestic companies, which saw their combined market value crumble by a staggering P2 billion to P44.4 billion. In 2014, three years back, the domestic companies had a combined market cap of over P46 billion. The foreign companies were of no exception. They also declined to P373.7 billion compared with the P374.7 billion the previous year. The BSEL further saw red in 2018. The domestic companies’ index value further dropped to P42.4 billion, its lowest value ever recorded in five years. The market cap was way lower than the P46.2 billion recorded in 2014, which meant that the past five years, domestic companies listed on the BSEL lost a whopping P4 billion in value. Also in 2018, the foreign companies also lost big. Their market cap depreciated to P370.7 billion, translating to P1 billion loss in value since 2014. BSEL’s total market value itself shed P5 billion. It was valued at P413.1 billion in 2018, a significant drop from P418.1 billion in 2014.The value of the domestic companies’ market cap to Botswana’s Gross Domestic Product (GDP) also declined from 34.5 percent in 2014 to 23.8 percent in 2018.

Those in the know are of the view that the decline in the BSEL market cap is a result of companies which delist, thus removing their value from the cumulative value of listed companies. If a company valued at P2 billion delists for example, it means that the BSEL market value will decline by that value. For the past five years, especially between 2016 and 2018, there were delistings which occurred, which have and will contribute to the reduction of the BSEL market cap. Further, some listed companies have been seeing a reduction in market cap, driven mostly by the declining share price.

Since 2016, the BSEL has recorded six equity listings and four delisting’s. In 2017, the BSEL lost two companies, according to the CEO, which piles pressure on Tsheole’s ambitious plans to position the Exchange as pivotal part of economic development. Two more were delisted in 2018.

As per the BSEL Strategy for the period 2017 to 2021, the BSE aims to increase the number of domestic companies listed to 30. They are currently 26. The BSEL also wants to increase the number of foreign companies listed to 15. They are currently 10.  In 2018, BSEL lost two more companies, according to Tsheole. Furnmart has resolved to delist its shares. The furniture retailer cited new listing requirements which come into effect this year fearing that they will fail to meet them. Further, Furnmart share price has been depreciating since 2015 and has ranged between 53 and 55 thebe since October.  Further, African Energy also delisted. ImaraHoldins as well as Galane Gold also delisted.