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BSEL shrugs off COVID-19…….for now

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BSEL shrugs off COVID-19.......for now

While several stock exchanges around the world have experienced a knock due to the COVID-19 virus, Botswana Stock Exchange Limited (BSEL) has remained steadfast.

According to an analyst at Motswedi Securities, who also serves as the firm’s Head of Research, Garry Juma, this is largely because of BSEL’s illiquidity.

In essence, Juma explained there has been precious little buying or selling of shares.

“What has happened in other markets is that some investors were selling their shares in order to take their money to safe havens,” the analyst told Voice Money this week.

Meanwhile, the BSEL Chief Executive Officer, Thapelo Tsheole says there are many reasons for the local stock market’s unwavering performance amidst the global economic uncertainty caused by coronavirus.

Reiterating Juma’s illiquidity explanation, which he attributed to the excess pools of capital available in Botswana, Tsheole also highlighted the lack of panic buying as a key factor.

The CEO further attributed BSEL’s steady performance to the slow filtering of the effects of the virus into the local economy.

“BSE is the fourth liquid stock exchange in Africa out of 27 stock exchanges but the rest went negative and we went positive. Again the market has been undervalued for some time in terms of Price Earnings ratios, so it was likely to go up from the beginning of the year,” reasoned Tsheole.

It remains to be seen whether the BSEL will continue to withstand the pressure of the virus as negative effects are expected to be felt in the coming weeks. This is especially true after South Africa, a major trading partner of Botswana, announced a nationwide lockdown beginning this week.

The lockdown is meant to contain the spread of the deadly virus, which has seen the country registering nearly 600 cases this week.

“The economic impacts are already here, the question is to what extent will they affect us,” said Juma adding that even if a stimulus package was to be introduced, one way or the other sectors will continue to suffer.

BSEL market performance report for the first three months of the year show that the market returns for 2019 have continued into 2020, registering a steady performance during the first two and half months of the year.

The Domestic Company Index (DCI) has appreciated by 1.46 percent in comparison to a 0.34 percent appreciation in the corresponding period in 2019.

The Domestic Company Total Return Index (DCTRI) appreciated by 2.12 percent compared to 0.81 percent increase over the same period last year.

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Business

De Beers cuts production as Covid-19 effects set in

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In response to the Covid-19 pandemic, diamond mining conglomerate De Beers – has revised its global production guidance.

The company, which operates Debswana Mines with Botswana government in a 50/50 joint venture, revealed this week that it has cut its global production guidance by 7 million carats to reflect demand and support long-term value.

When updating the media last Thursday afternoon, De Beers – Global Sightholder Sales Executive Vice President, Paul Rowley described the pandemic as unprecedented and nothing like what the world has ever faced.

Previously, production guidance was set between 32-34 million carats for the year, but non due to the pandemic which has affected business across sectors.

Rowley told the media that the diamond mining giant is also refocusing and repurposing marketing plans to reflect a changing situation.

Furthermore, he said the group is also working with partners in government to see how to generate revenue when international customers are unable to travel adding that creating viewing centres in other countries is another option being considered as a temporary measure.

Despite the current challenges facing the diamond industry, and all other industries, Rowley said De Beers continues to make major investments across the diamond value chain to ensure the industry’s continued success during these unprecedented times.

De Beers, according to Rowley, is making investments in production capacity expansion, rough diamond distribution efficiency and downstream consumer marketing campaigns.

Rowley told journalists that Covid-19 has impacted heavily on all the three streams, being downstream, midstream and upstream.

On the downstream side, he noted that the pandemic has had a direct impact of De Beers Jewellers retail outlets due to store closures and consumer demand impact.

In the midstream, he says the pandemic has negatively affected the rough diamond sales as the third sight was cancelled due to logistical challenges as countries went on a lockdown.

The fourth sight was only attended by local beneficiation Sightholders as international buyers were unable to travel once again.

In the upstream, Rowley said operations across the globe were impacted and the group has had to implement new requirements and procedures in the workplace to keep the workers safe.

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Business

Letlole La Rona suspends CEO

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Letlole La Rona (LLR), a property company listed on the Botswana Stock Limited (BSEL), on Tuesday moved to suspend its Chief Executive Officer, Chikuni Shenjere-Mutiswa.

His suspension, according to a notice to shareholders, follows preliminary findings arising from an investigation into issues relating to the company’s Long-term Incentive Plan.

Mutiswa who was appointed LLR CEO in June 2018, is said to have been suspended with full benefits pending the outcome of the full investigations.

Commenting on the latest developments, LLR Board Chairperson, Boitumelo Mogopa noted good governance remains sacrosanct to the board and all staff of the company.

“The preliminary findings of the possible misconduct arising from the investigations relate to the circumstances around the company’s Long-term Incentive Plan during or around March this year and possible acts or omissions by an individual in a unique position of power,” said Mogopa.

Mogopa said this by no means reflects the integrity of the board, financial performance and company portfolio.

“For us, it remains business as usual as the due process takes its course,” said Mogopa.

Meanwhile, the board has in the interim appointed Botshelo Mokotedi to hold the fort on an acting basis while investigations continue.

Mokotedi is seconded from Botswana Development Corporation (BDC) – a major shareholder in LLR – where he is the Head of Risk.

He is described as a forward-thinking, highly motivated and results-oriented individual with more than a decade experience in the financial services sector across a variety of senior roles, including Business Development, Credit Analysis as well as Portfolio and Risk Management.

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