Consumer goods stocks leverage price increases across their product offerings
Banking sector also contributed to the overall positive trend
In Q4 2023, Botswana Insurance Fund Management (Bifm) announced that its Local Equity Fund yielded a return of 4.09%. This growth was primarily driven by the consumer sector, which accounted for the majority of gains during the quarter. Additionally, significant contributions came from the banking and telecommunications sectors.
The Bifm Local Equity Fund primarily allocates its investments to listed local equities. However, it also has the flexibility to invest in offshore equities and convertible bonds, with limits set at 20% and 10%, respectively.
Bifm’s report highlighted that the local equity market closed the final quarter of the year on a positive trajectory. Out of the 23 listed stocks, 14 experienced price increases over the last six months, signaling favorable market conditions. Additionally, five stocks maintained a stable performance, while only four stocks witnessed a decline in price during the same period.
This overall strong performance was underpinned by robust earnings growth across various sectors, contributing to the positive sentiment in the market.
During the quarter, Seed Co International emerged as the top performer on the Botswana Stock Exchange (BSE), witnessing an impressive appreciation of 34.62%. Additionally, several other notable movers contributed to the market’s positive performance. These included CA Sales, which saw an 8.52% increase, RDC Properties with a 6.67% appreciation, Letlole La Rona with a 5.88% rise, First National Bank Botswana (FNBB) with a 5.65% uptick, and Standard Chartered Bank, which recorded a 4.95% growth.
Over the twelve-month period, the local equity market demonstrated robust gains, as highlighted by Bifm. Chobe recorded a significant appreciation of 87.74%, followed by CA Sales with a notable increase of 60.71%. Seed Co also experienced positive growth, appreciating by 29.63%, while Sefalana saw an appreciation of 18.74%.
In addition to these notable performances, the banking sector also contributed to the overall positive trend. FNBB witnessed a healthy appreciation of 22.86%, while ABSA experienced a slightly higher increase of 23.05%. Notably, Standard Chartered Bank showed remarkable growth, appreciating by 84.67% over the same twelve-month period.
Bifm highlighted that the local equity market achieved its most outstanding annual performance in the past decade, returning 25.47% (DCTRI) throughout 2023. Despite the unprecedented uncertainty and turbulence caused by the COVID-19 pandemic throughout much of 2020 and 2021, the years 2022 and 2023 marked a significant period of recovery and growth for the local equity market.
The price growth observed throughout the year was primarily propelled by the impressive performance of large-cap banking stocks and consumer sector stocks. These sectors particularly thrived amid the high inflationary environment prevalent throughout much of 2022.
The local banking sector saw a sharp rise in interest income over the year, largely attributed to the positive impact of interest rate increases. This supportive environment bolstered the growth of interest income for local banks.
Similarly, consumer goods stocks reported robust growth in earnings, leveraging price increases across their product offerings.
Bifm’s Local Equity fund is appropriate for investors with an appetite for high risk and tolerance for periods of high volatility who wish to generate capital growth over the long term period.
Comments