Barclays Africa on Thursday listed its Inflation-Linked Bond Index exchange traded fund (ILBI ETF) on the Botswana Stock Exchange (BSE) to provide local investors with an opportunity to invest in de facto South African government inflation bond benchmark index. In addition to giving the local investors direct access to a de facto SA government inflation bond benchmark, the listing is also expected to increase the liquidity of the BSE and improve financial markets in Botswana.
Africa Head of Trading at Barclays Africa Group, George Asante, said ETFs are one of the fastest growing investment classes in the history of finance. “The ETF market has grown substantially over the last four years to well over $3 trillion, surpassing Hedge Funds,” Asante said. The listing of the ILBI ETF on the BSE is the first for Barclays Africa outside South Africa and it was first listed on the Johannesburg Stock Exchange (JSE) in January 2012.
Asante said the listing would provide investors with an access to previously unavailable asset classes, thus improving diversification opportunities and reducing investment risk. He said the listing will also provide investors with low-cost convenient alternatives to traditional non-listed products as it access the underlying investments in an efficient manner.
For his, BSE Deputy CEO Thapelo Tsheole said the stock exchange has embarked on a strategy to ensure that Botswana becomes a destination of choice for investors by ensuring robust stock exchange with quality equity, bond and alternative investments listings. The recent of the developments is the introduction of Market-Making for all the listed securities. Tsheole said the Market-making will ensure that there is always a trading counterpart on either the buy or sell side which will in turn improve liquidity on the BSE.
In addition, Tsheole said the BSE wishes to attract the listings of commercial papers which are unsecured and short term debt instrument that allow corporates to meet their current liability needs. The listing of the Barclays Africa Group ILBI ETF becomes the fourth EFT to list on the BSE following the first listing of NewGold ETF in 2010 which was followed by BettaBeta and New plat.
Tsheole said as of November 12, 2015, a cumulative 307 million ETF units had been traded on the BSE, yielding a cumulative turnover of P1.2 billion. This, Tsheole said, this shows that the ETFs have improved the BSE’s product offering and liquidity.
“To this end, the BSE plans to leverage on its expertise in introducing ETFs to introduce similar products whose underlying assets are either onshore or offshore,” said Tsheole, noting that the initiative sounds viable given the excess liquidity in domestic capital markets relative to existing investment opportunities.
The BSE’s intention, according to Tsheole, is to position itself as a regional finance and investment hub and will do so by launching strategic partnerships with established financial instruments providers from outside and within Botswana to explore ways of establishing the BSE as a regional fiancé and investment arm.
Barclays Bank Botswana Managing Director, Reinette va der Merwe, said the market has been yearning for products that allow institutional investors to invest more in local products and the listing shows innovation and responsiveness on the part of the bank.