An African Corner of Equity Market Resists Virus Rout — For Now

(Bloomberg) --

As the coronavirus pandemic ravages global equity markets, only one country’s benchmark index has managed to cling on to some of its 2020 gains.

Botswana stocks are up 1.5% this year, alone among 94 global primary indexes tracked by Bloomberg in being in the green. The relative resilience is partly down to a mismatch between supply and demand from investors chasing limited options, said Moatlhodi Sebabole, chief economist for First National Bank Botswana.

Local pension fund managers, who hold assets equivalent to 50% of gross domestic product, are required to invest at least 30% of these in Botswana, Sebabole said. “Institutional investors, who have a long-term investment horizon, are buying and holding the instruments and not selling,” he said. “There have been no panic sales.”

Botswana’s market is valued at about $3.5 billion, dwarfed by the almost $600 billion size of neighboring South Africa’s, and the main index is often unchanged for days, reflecting a lack of liquidity. Finance company Letshego Holdings Ltd. is the best-performing stock this year, up 27%. Botswana Telecommunications Corp., down 8.4%, is the worst.

As of Tuesday, the country had yet to report a case of Covid-19.

Botswana Stock Exchange Chief Executive Officer Thapelo Tsheole said previous financial crises have taken a while to reach the country. “In the medium term, we are likely to see an impact, although probably not as horrific as other markets.”

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