Three new indices, which will reflect on the total returns of the constituent securities more effectively, are to be introduced by the Botswana Stock Exchange (BSE) next month.
The Local Asset Status Index (LASI), the Foreign Resources Sector (FRSI) and Domestic Financial Sector Index (DFSI) will replace the Domestic Companies Index (DCI) and Foreign Companies Index (FCI).
A statement from the BSE says the existing indices are computer-based on capital gains only and do not factor in total returns on securities. Hence they will cease to exist on January 31.
"The new indices will therefore reflect the total returns of the constituents securities on both price movements as well as on dividend receipts," the statement says.
LAS will consist of all domestic companies and all foreign companies awarded local asset status by the Ministry of Finance and Development Planning.
The FRSIU will be composed of all foreign resource sector companies listed on the bourse while the DFSI will consist of all domestic financial services companies listed.
There are presently 31 counters on the BSE with 20 companies on the domestic board. Although only two companies - Aviva and PrimeTime - listed on the bourse last year, it was spirited with action, which was a reflection of what was happening on the ground, particularly in the mining sector.
The DCI opened the year at 6195.45 and has risen by 42 percent since. But it was on a free fall in the last quarter of 2007, mostly due to market correction by commercial banks as investors thought shares were over-priced. The highest level the DCI reached was 9866.19 points on August 31.
While only two companies listed on the BSE, another two - LionOre and Forbes - de-listed from the bourse in 2007.
Meanwhile, trading this year started at a rather subdued pace but investors have started to be active on the market in the past week, driven by anticipation of company results expected in the first quarter of the year.
Coming out of the usually bearish fourth quarter with investors in the 'selling mood', the amount of shares traded last week increased by over 800 percent to 3.5 million from around 384 000 the previous week, according to a report by Stockbrokers Botswana.
Most of the blue-chip counters have now entered their 'closed periods' and the improved liquidity may be an indication of the confidence or lack thereof of the expected financial results to be released during the first quarter of 2008.
Among the blue-chip companies expected to report their results in the next three months are Barclays, Stanchart, Sefalana, Letshogo, BIHL and FNNB.
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