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Market Overview

The BSE was established in 1989, when it was known as the Botswana Share Market (BSM). Then, there were only 5 (five) listed entities, with a single broking firm in the market which was also charged with facilitating trading on the exchange via matching orders. As the years passed, it was becoming clear that there is a need to separate the running of the exchange from the broking firm and this set in motion preparation for the establishment of an independent exchange. The authorities only established the Botswana stock exchange (BSE) as a separate legal entity in November 1995 following the passing of the BSE Act of 1994.

The market capitalization of the BSE grew from 254 million pula in 1989 to 182 126.60 in 2002 and 534 184.66 million pula as at end of 2006.The number of securities (shares and fixed income) listed in the BSE rose from 5 in 1989 to 44 as of 2004 and to 56 in 2006 for the sake of consistency, can we use just the year or year and month for all if we are using the same period just different years.

In 1989, the only market performance index was the Botswana Share Market index (BSI) and was set at 100. However, as the market developed and diversified in terms of domestic companies and dual foreign companies listed, the need for additional markets indicators arose. Three distinct indices were introduced to reflect the market diversity and these are; domestic company index (DCI), foreign company index (FCI) and the all company index (ACI). As at end of 2006 the DCI recorded 6 195.45 points, while the FCI hit 1 777.30 points and the ACI 1 914.18 points. The structure of the BSE market has also changed since its inception, with diversification of sectors from Wholesaling and Retailing, Financial Services and insurance, Banking, Property and Property trust, Mining, Security services, Transport and Tourism, Energy, and Health care and Emergency services. In 2001 the BSE introduced a Venture Capital Board dedicated to companies looking for start up capital.

Further developments in the market over the years include the listing of Botswana government bonds in the exchange in 2003; this was an initiative by the government to develop the domestic capital markets. The importance of this was to widen the availability of alternative investment instruments and enable the establishment of a relatively risk free yield curve as a benchmark for other bond issues.

Market infrastructure development

As part of the BSE’s strategy to develop the Capital market a major development currently underway at the BSE is the implementation of a Central Securities Depository (CSD) which commenced in October 2007 This implementation of the CSD will bring prompt, efficient clearing and settlement of trades and the reduction of risks inherent in the process. With the introduction of the CSD, the settlement cycle will be tightened and the BSE intends to shorten it to T+ 3 in conforming to international standards and to reduce settlement risk. The CSD will also make it possible for the BSE to record and analyze trading information more efficiently thereby assisting in the deployment of its marketing strategy more effectively. Subsequent to implementing the CSD, the BSE hopes to commence to work on implementing an Automated Trading System (ATS). This development will support the BSE’s marketing initiatives by making it easy for both Batswana and Foreign investors to trade on the BSE.

In addition, the BSE Act of 1994 is being reviewed in order to set up an appropriate operational and regulatory legal framework in efforts to align it with International Best Practice and cater for innovations in financial markets around the world. The exchange is also involved in the development of more instruments which are more than traditional shares (equities) to be listed in the exchange, to give investors a variety of exchange listed instruments.

Market Report

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