Should I be investing in shares on the Botswana Stock Exchange?
To the ordinary investor, Stocks and Shares are a medium to long term investment due to the volatility of equity prices. In Botswana, there is an additional risk of an illiquid market - meaning that shares may be difficult to buy or to sell.
Click here to view the Botswana Stock Exchange Performance 2023
Botswana listed shares can only be bought directly through a licensed BSE Broker. As at 2024, there are three licensed BSE Brokers:
How to buy shares on the Botswana Stock Exchange
Before any order can be taken by the Broker, the investor has to open an account with a Broker through which the orders will be taken. A Central Securities Depositary (CSD) account will also be opened. A CSD account is an account in which the investors shares will be held or secured and from which statements showing the holdings will be sent to the investor. Once a trading account and a CSD account have been opened, you can place your order and buy shares.
When the Broker receives an order, it is relayed to the BSE to be executed in a system that collects orders from several other Brokers and matches them. The system is known as the Automated Trading System (ATS). It is the Broker who does the actual buying and selling of shares on your behalf using the ATS.
Once the order has been executed, the Broker will confirm the trade to the client by sending a contract note that shows the name of the company in which shares have been bought, the number of shares, the price at which the shares were bought and the charges incurred in the transaction. Three days after the trade has been executed, the shares will be credited in your CSD account and from that date on you will become a shareholder of the company in which you have bought the shares.
Caution - Lack of Liquidity
Several stocks on the BSE rarely trade, which means they are extremely illiquid. If you do need to sell them for whatever personal reason - or because you see the market is crashing - your only option for an early exit is to take a very large loss.