[2008-11-11]  Profit Taking Pulls Down Market
The hype of activity that has gripped the Botswana Stock Exchange in the past five months took a breather in the month of October as profit takers descended on the market to crystallise their gains.

From around June, buoyed by excellent company results and corporate developments, stock prices, mostly financial, have been rallying with counters such as FNBB, Barclays and Stanchart leading the pack.

However, characteristic with trends on bourses across the world towards the end of the year, the month of October was dominated by sellers leading to the mainstream Domestic Companies Index (DCI) losing 2.4 percent over the period and still down 9.3 percent on a year-to-date basis.

At the end of October, the market capitalisation of the board was P32.6 million, coming down from P35.4 million 52 weeks ago.

Of the 20 domestic counters, four closed heavier, 13 lost weight, three closed unchanged. The losses were in large cap stocks which lost 17.8 percent on aggregate. The mid caps gained 18.2 percent while the small caps lost 1 percent (adjusted for the October listing of Funeral Services Group (FSG).

"It looks like the markets are taking a break," says Capital Asset Management's Leutlwetse Tumelo. "This is borne out by the performance of the major banks, the backbone of the bourse, with 61.3 percent of the domestic market cap.

"Barclays and First National Bank are flattening after their credit crunch recoveries over June to September, Standard Chartered is still running, but I see it also slowing towards the end of the year."

Trade over the past 52 weeks has been 156,728,904 shares or 7.41 percent of the float.

There has been some profit-taking, but volumes on the normally tightly held exchange slowed over the last four weeks.

"Most movement was in the financials, with investors taking welcome profits after the losses of the first half of the year," Tumelo says.

Of the eight Botswana mining-related stocks on the foreign board of the bourse, one improved on its previous four weeks' performance while the rest slowed. The market capitalisation of the stocks closed October 31 at P13.350 billion. Over the last four weeks it had dropped 3.6 percent, over 52 weeks it is down 41.8 percent.

Meanwhile, an on-going slide in commodity prices estimated at 80 percent over the last 18 months and more recent risk assessments of venture capital stocks of internationally-controlled exploration companies in the current international financial climate continue to impact on Botswana's mining sector.

The last six months have seen major losses - 43 percent since May 2 - and the six months before then saw little growth.

"This has little to do with events in Botswana," Tumelo says. "It was first the slide in commodities, then the international financial issues.

"The fear is that the drying up of funds will delay the mining projects and spin off from that hold back government development initiatives."


Source: All Africa