Misanet / Mmegi, 24 May - Auerbach Grayson, one of the world's largest brokerage firms, assured emerging capital markets on the African continent, especially Botswana that their performance presents good opportunities for the flow of foreign direct investment (FDI) into their countries.

"The public stock market is very attractive which in turn will attract investment. The impression is of a very unique market. I was also impressed by the International Financial Services Centre (IFSC), which could bring investment to Botswana," Jonathan Auerbach, a partner at the New York based firm told reporters.

Mr Auerbach was speaking in Botswana's capital, Gaborone, as he concluded his trip to African countries where he has symbiotic relationships with brokerage firms. These countries include Ghana, South Africa, Côte d'Ivoire and Botswana, among others.

The company, which is networked to 87 countries the world over, has a symbiotic relationship with Capital Securities, one of the big brokerage firms in the country that sponsors some companies listed on the local bourse - Botswana Stock Exchange (BSE).

Flanked by Capital Securities CEO Lipalesa Siwawa and analyst and researcher Leutlwetse Tumelo, Mr Auerbach said that his mission to Africa was to see for himself what is happening on the Pan-African scene and noted that his firm has relationships with brokerages in 12 African countries.

"The business is attractive and it will grow to and provide liquidities in the emerging markets. This will attract entrepreneurs to buy stocks and make money," Mr Auerbach said on Ascension Day.

The emerging, slow but thriving capital market developed in Botswana in 1989, when the share market was developed, which later became BSE in 1995.

It started with five listed companies but the index has grown tremendously and boasts of market capitalisation of pula 8.9 billion (US$ 1.9 billion), which has been growing over the years.

The capital market was also boosted when the Batswana government issued rounds of bonds in order to support the fledging capital market.

Mr Auerbach's comments come on the backdrop of the credit rating given to Botswana by two international credit rating agencies, Moody's Investor Services and Standard and Poor. According to the agencies, Botswana's ratings reflect favourable debt and liquidity positions and government's prudent management of diamonds export earnings that have enabled it to expand its infrastructure and the standard of living since gaining independence.

"The country should continue with its good reputation of democracy and low inflation apart from the credit rating to attain blue-chips in the market," Mr Auerbach said.

During the rating, Moody's assigned Botswana a long term sovereign credit rating of -A2 and a short-term foreign currency rating of prime -1 and a domestic currency rating of A1, ratings that the country has maintained since 2001. The other rating firm, Standard & Poor re-affirmed its long and short-term local currency rating of A+ and A -1, respectively, while the long and short term for foreign currency rating were also left at A- and A-1.

The reports put Botswana in the same league with the southern European countries of Greece and Poland.

He however said that he foresees the US dollar maintaining its weakening rally for the next four years, which will boost the commodity based continent, he said adding that his bottom-line impression is that the continent is attractive for investment.

"The markets in Africa work pretty well and have good information flow. As they grow they will provide liquidity to emerging markets," Mr Auerbach said.

Accompanying him was Francis Daniels - a consultant with African Development Fund based in South Africa, who was equally upbeat by the performance of the emerging capital markets. "We are looking for more investment in Africa and the flow of investment is a direct result of the credit rating, which is why companies are investing in Botswana. There is a great yield in Botswana than other parts," Mr Daniels said.

By Kabo Mokgoabone, Mmegi staff writer

© Mmegi / afrol News

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