[2007-10-24]  Banks Pull Down the DCI
Pulled down by heavy losses in the banking counters, the domestic index on the Botswana Stock Exchange (BSE) lost ground last week.

The DCI weakened by 1,15 percent as all the three listed banks registered losses, with FNBB leading the pack with a 6.45 percent loss while Stanchart softened by 3.85 percent and Barclays lost 0.54 percent.


In the week under review, the FCI traded flat at 2205.93 points. The biggest mover of the week was Investec, which put up a significant 10.56 percent, while most of the other healthy gains were recorded in the mining counters, buoyed by firming prices induced by the current mining boom.

After registering impressive gains in the first half of the year, banking counters are in what market analysts say is a self correction exercise, where they are coming down to the real worthy prices.

On the whole, the DCI itself has cooled off in the third quarter, managing only a two percent growth, down from 26 percent and 23 percent in the first and second quarters respectively.

According to a Stockbrokers Botswana report, the US sub-prime housing problem may have left the DCI unscathed but it surely burst the banks' bubble in the past few months.

" FNBB and Stanchart made up two of the only three decliners on the domestic board during the third quarter, while Barclays added a marginal two percent," a source at Stockbrokers Botswana said.

However, Barclays has registered some significant losses this month, losing over 10 percent in value after the close of the third quarter.

Stockbrokers Botswana believes the DCI will continue to be pulled down by the self-correction of large cap banks in the last quarter.

"We noted earlier this year that many stocks valuations did not appear to be tracking fundamentals," said a report. "With the banking stock bubble popped, fundamentals are back and market participants will be looking for stocks with valuations supported by fundamentals."


ABCH was the star performer in the third quarter, indexing a 52 percent gain. The pan-African investment bank has been raising capital to expand its business, raking in about US$80 million in the past year.

Other notable gainers in the period included Sefcash (31 percent) and BIHL and Sefalana (29 percent).

Topping the shakers in the quarter was A-Cap Resources at 45 percent, Investec (20 percent), RPC Data (18 percent) and FNBB (13 percent).


Source: Copyright © 2007 Mmegi/The Reporter.