A rough few weeks for stocks

  • BTCL trades lowest monthly volume since listing
  •  Letshego takes a beating
  •  Chobe Holdings drops 10 thebe
  •  Cresta trades down 5 thebe


Coming off of its second positive month for the year, telecommunications giant, Botswana Telecommunications Corporation Limited (BTCL) spiraled downward once more to end the month of November 7.9 percent weaker, according to research done by brokerage firm, Motswedi Securities.

It emerges that the stock lost ground for the ninth month this year, and was, by the 30th of November, worth P1.05 each. The demand for the stock has fallen quite significantly and only managed to drive the stock to a high of P1.14 in its last rally that peaked in October this year. At the end of the month, BTCL had over 600,000 shares available for sale, with all of them offered at its market price of P1.05 each.

The overall market liquidity numbers for the month were distorted by a huge trade that happened for beer maker, Sechaba Breweries in the middle of the month. Sechaba traded 22.4million shares to the sum of P425.6million, whereas BTCL for the entire month traded a meagre 292,738. In light of the huge abnormal trade from Sechaba Breweries during the month, BTCL contributed a small 0.1 percent to the total market’s liquidity.

Head of research at Motswedi Securities, Garry Juma, team said there are two main drivers that have contributed to the fall in BTCL’s share price. The first of which being, that the stock has lost a significant amount of investor confidence.

“This is a huge problem particularly because it is held very strongly by the retail base. Investors are practicing what is known as “panic selling”. This is an instance where investors lose confidence in a stock and then in turn sell it off at any price they can get,” said the team.

Further, the stockbrokers said this normally has the effect of driving the price down. With the price down, investors “panic” further thereby selling more which puts further pressure on the price. This time last year, BTCL had already released their interim results, which impacted the price spectacularly. However, this time around, the company has been relatively quiet with regards to their results. This is normally an indicator that the company’s financials will not be anything to write home about, according to Juma. The market’s sentiments with regards to BTCL were reflected in the number of shares that traded in the month. Compared to the prior month’s volume, BTCL only moved 292,738 shares in November – an indication of the very little appetite the market had for the stock.

Motswedi Securities said the stocks decline will be on the basis that the company has not released any encouraging trading statements that would inject life into the demand for the stock.

“In fact, the absence of any trading statement at all will likely weigh heavy on the stock’s performance as we wait for the numbers to come in. At this point, any investors that are holding on to the stock, are likely holding on to the stock for the attractive dividend policy the company has in place and the hopes that the stock’s performance will do better in time.”

It was also a week of losses on the domestic bourse.
Letshego takes a beating

Financial services company, Letshego, received a beating from the market this week as it got knocked down 21 thebe to close at P1.60 per share. This is the lowest valuation the stock has had in the last 12 months  more specifically, in the last 7 years. The last time Letshego was valued at P1.60 was back in 2010 after the 10 for 1 share split.
Chobe Holdings drops 10 thebe

Chobe Holdings, which happens to be one of the year’s top performers on the local exchange (so far), reversed gains for the first time this year as it dropped 10 thebe during the week just ended. The stock is currently second on the list of top performers on the local bourse at a year to date growth of 14.5 percent. The tourism company was worth P10.50 by the end of the week. BTCL, dropped 5 thebe down to end the week at its Initial Public Offering (IPO) price of P1.00 per share. “This was an expected outcome for the stock, given the selling pressure that has been weighing on the stock,” said Juma.

Over 1.1million shares changed hands, with indication that there could be more on the market to sell.

Cresta trades down 5 thebe

Cresta joined the party as well, as it traded 5 thebe down after a handful of shares crossed the board. Cresta is currently undergoing negotiations with Letlole La Rona to purchase the properties on which a number of their hotels are situated. The properties include where Cresta’s President Hotel and Cresta Lodge are located. Investors do not seem too impressed by these negotiations, as the stock continued to reduce its year to date gains.