[2008-09-25]  BSE Reverses Year to Date Loses
On the back of a strong recovery by financial counters, the Domestic Companies Index (DCI) has now reversed its year-to-date negative performance, despite the recent turmoil on global equity markets.

An earlier market correction by financial counters resulted in year-to-date losses of close to 20 percent, but the DCI has bounced back to positive territory, ending 0.54 percent up by the close of trading yesterday.


Yesterday the DCI continued on an upward trend, gaining a further 0.09 percent to end the day at 8,472.57 points on the back of an increase in the weighted prices of Barclays and FNBB.

The FCI and the ACI however lost 0.12 percent and 0.11 percent each to end the day at 2,558.11 points and 2,741.91 points respectively. A total of 2.3 million shares, valued at P8.9 million were traded in Tuesday's trading as compared to around 2.6 million shares, valued at P18.9 million that exchanged hands on Monday.

During last week in which around 1.6 million shares valued at P7.5 million were traded, banking giants Stanchart, FNBB and Barclays led the gainers pack, while the foreign board continued to be characterised by losses, mainly in resources sector counters.

According to a report compiled by Motswedi Securities, FNBB's impressive performance continued during the week in retrospect, powering on 10.1 percent to close the week at 315thebe.

On a year-to-date, FNBB is now leading the pack on the Domestic Equity Main Board, up 16.7 percent, and is on the verge of surpassing its 52-week high of 325thebe. Barclays Bank was in close pursuit, up 8.7 percent to 815thebe, after recording gains on four consecutive days during the week in retrospect.

Other gains were in Anglo, which recovered by 4.7 percent to 28,052thebe on 100 shares; African Copper pushed on 3.4 percent to 152thebe, RPC Data added 2 percent to 50thebe and Stanchart finished the week 1.4 percent higher at 1,750thebe.

Although the future looks bright for the DCI because of the flourishing performance by banks, one counter that is set for some battering is brewer Sechaba Holding'.

Investor confidence in the counter would have hit rock bottom following Friday's announcement by the Ministry of Trade and Industry that the hotly disputed alcohol levy will finally be implemented from October 1, albeit at a lower 30 percent.

Ever since news of the levy first broke two months ago, Sechaba's stock price has been at the receiving end of investors' backlash, leading to main shareholder SABMiller, Government itself and individual shareholders losing millions of pula as the share price plummeted. Government, through its investment arm the Botswana Development Corporation (BDC), holds a 25-percent stake in the Sechaba Holdings.

Going forward, investors' sentiments towards the counter is set to be more on the negative side as the levy will have a heavy toll on the company's sales volumes.

In another development, listed Olympia Capital Corporation (OCC) has completed the acquisition of 50% + 1 of the equity of Natwood, a manufacturing company based in Cape Town, South Africa. Natwood has simultaneously acquired 100 percent of the business of Framing Prints International (FPI), also a Cape Town-based business in similar lines to Natwood.

These acquisitions have been funded by bank debt in South Africa and a loan from Olympia Capital Holdings Limited. Analysts say they expect these acquisitions to go a long way in boosting Olympia Capital's bottom line.

On the other hand, recently listed micro lender Blue Financial Services has announced that for the six-month period ended 31 August 2008, the company expects earnings per share and headline earnings per share to be between 110 percent and 130 percent higher than comparative figures for the previous corresponding period.

The company also announced that recent developments with the American International Group (AIG), which is a 14-percent shareholder in Blue, will have no real impact on it.

Together with the International Finance Corporation and Emerging Capital Partners, AIG are equity holders in Blue but do not fund the Group.

Last week, AIG,once the world's largest insurer, was on the verge of collapse but was rescued by the US Federal Reserve, easing fears about a financial system crisis.

The Fed announced it would lend up to US$85 billion to AIG in a two-year plan aimed at saving it from a "disorderly failure" that could damage the global economy.


Source: Copyright © 2008 Mmegi/The Reporter.