The demand for the Botswana Telecommunications Corporation Limited (BTCL) shares has increased since the beginning of May, with the shares now shifting into the sellers’ market. This, according to local stockbrokerage firm, Motswedi Securities, is a situation where demand exceeds supply, giving sellers an advantage over buyers in price negotiations.
“The selling pressure on BTCL shares which has been prevailing since the beginning of this year has dissipated since the beginning of May with the market for BTCL shares shifting into a ‘sellers’ market. As a result, BTCL recovered by 8.8 percent to close the week at 111 thebe due to more buying from investors. A sellers’ market is when demand exceeds supply, giving sellers an advantage over buyers in price negotiations. The sudden change in the fortunes for BTCL shares doesn’t surprise us as BTCL selling pressure was not based on any fundamentals but was due to profit taking and to some extent retail investors offloading their shares to meet their obligations,” the firm explained.
It noted that history seems to be repeating itself as BTCL share price fell from a high of 135 thebe on the 12th of April 2016 to a low of 84 thebe on the 16th of August 2016 due to selling pressure.
“This selling pressure at that time changed overnight after the release of BTCL financial results and this attracted investors with the market turning into a sellers’ market overnight. The buying pressure was supported by the subsequent release of BTCL interim and full year financials which pushed BTCL share price to an all time high of 185 thebe on the 20 December 2017. The only difference this time around is that the buying momentum has kicked in much earlier before the results are out,” the firm explained further.
As to what exactly is pushing BTCL share price again, the Motswedi Securities team, led by Head of Research at the firm, Garry Juma, said the BTCL upward momentum was always expected as the selling pressure was not backed by any fundamentals. It notes that it was due to profit taking and to some extent some panic selling from retail investors.
It stated the below as some of the factors that are contributing to the current upward momentum.
Expectations of good financial results
The firm highlights that with BTCL now on closed period and the results for the year ended 31 March 2018 expected to be out before the end of June 2018, value based investors are now taking advantage of the current lower price to acquire the stock.
Expected good dividend
BTCL dividend policy is one of the best in the market and most investors are fully aware of this. With the results expected in a few weeks’ time and the expected dividend that will follow, most investors are acquiring the stock to cash in from the projected dividend.
Investor’s sentiments towards a stock can have a positive or a negative effect on its performance. Sometimes negative sentiments, even if they are not backed by any fundamentals, can sway investor’s perception over a stock and BTCL is not immune from this. Over the past few days investors have been warming up once again to BTCL and this is contributing to the upward momentum.