WEEKLY FINANCIAL MARKETS REPORT

30 May 2008 Tel: +267 318 8627 Dealing +267 318 8622 Fax +267 318 8629 E-mail- [email protected]

Private: Information for our clients only

1.0 Equity Market

The Botswana Stock Exchange closed the A total of 1,989,140 shares, valued at P7.7 week on a winning streak with all the major million were traded on the local bourse during indices closing in the positive territory. The DCI the week under review. ended the week 0.25% higher at 6 934.71 points, while the FCI gained 0.03% to 2 597.95 points and ACI ended the week 0.04% higher at 2 756.48 points.

BSE Indices

Index 30 May 23 May Change YTD 2008 2008 (%) (%)

DCI• 6 934.71 6 917.43 +0.25 -17.71

FCI• 2 597.95 2 597.12 +0.03 +18.04 ACI• 2 756.48 2 755.36 +0.04 +15.94 For the week, A-Cap Resources was the On a year to date basis, the DCI has softened biggest gainer up 65% to close the week at by -17.71%, whilst the FCI and the ACI have 330 thebe. The sharp rise was due to market firmed by 18.04% and 15.94% respectively. correction as the counter had weakened significantly by 57% y-o-y before the gain. On a year to date, the counter has now weakened by only 28.3%. Imara closed the week 10.5% higher at 950 thebe on positive investors sentiments after the company announced that year end profits will be above expectations. ABC Holdings gained 8.6% to 380 thebe, while RPC Data ended the week 3.8% higher at 55

thebe. Other gains were recorded in BIHL up

2.9% to 1,050 thebe as investors took

advantage of the dip in the counter, Diamonex

and AF Diamonds recovered by 1

Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd

2.5% each to 165 thebe and 1,047 thebe tenders recently. As a result, shareholders are respectively. advised to exercise caution when dealing with the companies shares. The table below shows Chobe gained 1.9% to 420 thebe after the the major movers during week. release of strong financial results for the year ended 29 February 2008, where revenue Major Market Movers- Week Ending 30 May increased by 23% to P85.9 million on the back Counter 30 23 Change YTD May May (%) (%) of a rise in occupancies. Sechaba put on 08 (t) 08 (t) 0.3% to close the week at 1,825 thebe in A-CAP 330 200 +65.0 -28.3 response to the release of solid financial RESOURCES• results for the year ended 31 March 2008, IMARA• 950 860 +10.5 +26.7 where turnover rose by 19.3% to P1.28 billion, ABCH• 380 350 +8.6 -5.0 driven by good volumes in clear beer, RPC DATA• 55 53 +3.8 -8.3 traditional beer and soft drinks. Clear beer and BIHL• 1,050 1,020 +2.9 -37.9 traditional beer volumes grew by 7.8% and 5% DIAMONEX• 165 161 +2.5 -29.5 respectively. Sales and distribution expenses AF DIAMONDS • 1,047 1,021 +2.5 -12.0 went up by 8.2% to P14.6 million while CHOBE• 420 412 +1.9 -2.3 administrative and other operating expenses AFRICAN 520 512 +1.6 -27.9 rose by 15.6% to P171.2 million. African COPPER• Copper added 1.6% to 520 thebe. SECHABA• 1,825 1,820 +0.3 +7.4 DISCOVERY 363 370 -1.9 +4.3 METALS¯ Losses were however, recorded in Discovery LETSHEGO¯ 1,460 1,470 -0.7 +0.3 Metals down 1.9% to 363 thebe, Letshego lost BLUE¯ 553 554 -0.2 +4.3 0.7% to 1,460 thebe and Blue Financial

Services finished the week 0.2% higher at 553 Olympia Capital Corporation released its final thebe. results for the 14 months ended 29 February

2008 during the week. Turnover rose to P114 Meanwhile, Sefalana Holding Company million and the cost of sales for the period was Limited has issued a trading statement P84.4 million, with gross margins at 26.1%. informing shareholders that the Group’s Profit from operations came in at P5.96 million, earnings for the financial year beginning 01 while net profit for the year came in at P2.56 May 2008 to 30 April 2009 will be significantly million. EPS were 10.37 thebe, and a dividend higher than the previous years as the company of 2.90 thebe per share was declared. The have been awarded certain large contracts and 2

Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd

company is in the process of finalizing another release of better than expected US durable acquisition in based manufacturing goods orders data further boosted US stocks company. The acquisition will be funded by during the week under review. debt, internal resources and an advance from the parent company, Olympia Capital Holdings Limited. European markets opened the week higher buoyed by gains in telecommunication firms Corporate Briefs and on acquisition news in the beer sector. Company Meeting Date Time Venue Cconsolidation news in the insurance sector BARCLAYS AGM 26/06/08 1200hrs GICC and tumbling oil prices further propelled AGM= Annual General Meeting European stock markets higher during the

week under review.

Dividends Notices Asian stocks opened the week softer, closing Company Date Dividend Last Day Payable Declared (Gross)* to below the 14,000 psychological point mark, led Register RDCP# 0.31t** 23 May 30 May lower by exporters after the yen firmed against 14 Mar 08 08 08 the US dollar. The firming of the US dollar PRIMETIME* 4.36t** 25 Apr 30 May 27 Mar 08 08 08 against the yen and declining oil prices SECHABA 30 May 13 June 06 May 08 27.06t however, supported Asian stocks towards the 08 08 CHOBE 13 June 27 June end of the week. 14 May 08 19.0t 08 08 OLYMPIA 20 June 31 July 27 May 08 2.90t In South , the JSE All Share Index traded 08 08 mixed to low during the week after the release *=Interim Dividend #=Final Dividend **=Interest of poor inflation data and worse than expected

GDP data for the first quarter of 2008 . Real 2.0 International Stock Markets GDP at market prices on a quarterly basis rose by only 2.1% in the first quarter of 2008 from Major equity markets in the US opened the 5.3% in the fourth quarter of 2007, the lowest week lower, weighed down by losses in growth since the third quarter of 2001 financial companies, after analysts reduced

earnings estimates for Wall Street investment

banks. U.S. stoc ks however, rebounded

towards the middle of the week after a drop in

oil prices, sparked a rally in companies

dependent on consumer spending. The 3

Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd

3.0 Money Market-Week Ending 30 May BoBC Auction Results Issue BoBC 110608 The Bank of Botswana has tightened its Total Subscribed (P million) 4 055.679 monetary policy by reviewing the Bank Rate by Total Allotment (P million) 3 753.077 50 basis points from 14.50% to 15% in order to Stop-Out Price (P) 99.548 reign in on inflation. The last time the Central Stop-Out Yield (%) 12.54 Bank adjusted the Bank Rate was on June 18 Simple Rate (%) 11.84 2007, when the rate was decreased by the Weighted average yield of winning 12.44 same magnitude. Since October 2007, bids (%) Simple rate for weighted average 11.76 inflation has trended upwards and has winning bids (%) Weighted average price of winning 99.551 remained above the Bank’s target range of bids (P) between 3% to 6%. An increase in the Bank Minimum winning bid yield (%) 12.33 Rate is intended to contain second round Maximum bid yield (%) 15.46 effects and inflation expectations in order to Tenor 14 days sustain a low to medium-term inflation path.

The Central Bank now projects inflation to Elsewhere, ’s headline inflation, maintain an upward trend in the short term, rose to 11.1% in April 2008 from 10.6% in before declining to around 9% during the first March 2008. quarter of 2009.

Inflation and Interest rates Meanwhile, commercial banks have also Asset 30 May 08 23 May 08 raised their prime rate by the same margin to Y-o-Y Inflation (Botswana) • Apr 08 Mar 08 16.5% in tandem with the rise in the Bank 11.1% 9.8% Y-o-Y Inflation (South Africa)• Apr 08 Mar 08 Rate. This might however, impact negatively 11.1% 10.6% on the loan book size of commercial banks. In Prime Rate (%)• 16.50 16.00 another development, the Bank of Botswana Bank Rate (%)• 15.00 14.50 was on the money market on Tuesday, 28 May 14- day BoBC Rate (%)• 12.44 12.20 with a 14 day Bank of Botswana Certificates 91- day BoBC Rate (%) 11.97 11.97 (BoBC) maturing on June 11, 2008. Total bids amounted to P4.1 billion, but P3.8 billion was allotted and the weighted average yield firmed to 12.44% from 12.20% since the previous auction held on 20 May. Bids ranged between 15.46% and 12.33%.

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Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd

4.0 Foreign Exchange Market - Week Domestic (Pula Exchange rates)*

Ending 30 May Currency 30 May 23 May % YTD 08 08 Change (%) The US dollar firmed against most major BWP/US$ • 0.1564 0.1560 +0.26 -14.49 currencies during the week under review, lifted BWP/ZAR¯ 1.1806 1.1894 -0.74 -25.28 by weakening crude oil prices and several BWP/EURO• 0.1010 0.0992 +1.81 -42.12 positive economic reports. US durable goods BWP/GBP • 0.0791 0.0788 +0.38 -30.61 data fell by a smaller-than-expected 0.5% in BWP/JPY• 16.48 16.24 +1.48 -23.99 April 2008, giving some respite to investors *= The daily opening rates as produced by the Bank of worried about the US economic health. The Botswana are for information purposes only and do not represent the rate that may be offered for any foreign exchange US dollar was also spurred by the release of transactions. data which showed the U.S. economy grew in the first quarter faster than previously 5.0 Commodity Markets - Week estimated. The U.S. economy grew by 0.9% in Ending 30 May the first quarter of 2008, slightly better than Gold prices extended losses on each trading previously estimated and this further raised day during the week under review, falling to speculation that the US Federal Reserve will levels below US$900 an ounce as a sharp stop cutting interest rates. Meanwhile, the decline in oil prices lowered the metal's appeal rand firmed against the US dollar towards the as a hedge against inflation. Other precious end of the week on expectations of another metals followed gold, with platinum slipping to hike in interest rates by the SA Central Bank levels below US$2 000 an ounce in a broad after the release of weaker inflation data. commodities sell-off. Platinum is used as a catalysts, particularly in diesel catalysis, to help clean environmentally damaging fumes On the domestic market, the Pula lost ground from motor exhausts. against the rand, but firmed against the US dollar, the euro, the pound and the yen. On a year to date, the pula has weakened by The firming of the US dollar, further pushed the -14.49% against the US dollar, -25.28% bullion into the negative territory. There is a against the rand, -42.12% against the euro, negative correlation between gold and the US -30.61% against the pound and by dollar currency movements. Meanwhile, -23.99% against the yen. China, the world's second-largest gold

producer last year, is expected to surpass South Africa and become the world's top gold

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Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd producer in 2008 as it intends to raise output from 270.5 tonnes to 300 tonnes this year.

Crude oil prices which had risen to historic highs of around US$137 per barrel, fell to levels below US$130 per barrel during the week under review amid growing signs Asian demand could start to fall as consumer nations look to cut subsidies by raising local fuel prices. Elsewhere, Japan, the world's largest consumer of oil after the U.S. and China, said crude oil imports increased for the second consecutive month in April, up 20.9% from a year earlier. Crude oil imports rose to 21.72 million kiloliters (137 million barrels) last month.

RESEARCH SECTION

Garry Juma The views expressed in this document reflect the views of Motswedi Securities (Proprietary) Limited based on the Motswedi Securities (PTY) LTD information available at its disposal at the time of writing and may change without notice, and is provided for information purposes only. While Motswedi Securities (Proprietary) Limited Plot 113, Unit 30, Kgale Mews has taken all reasonable steps in carefully preparing the P/Bag 00223,Gaborone, Botswana document, it does not take any responsibility for any action that may be taken on the basis of the information contained herein. Tel: +267 318 8627 This document may not be reproduced, distributed or published Fax: +267 318 8629 by any recipient for any purposes without the authorization of Dealing: +267 318 8622 Motswedi Securities (Proprietary) Limited. Email: [email protected]

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Weekly Financial Markets Report **30 May 2008 ** Prepared by Motswedi Securities (Pty) Ltd