Investing on the Botswana Stock Exchange, part 2

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How to buy shares.

GABORONE- Following from the previous article on a brief introduction to the exchange', in this article we will look at how to buy shares on the Botswana Stock Exchange (BSE).

Being a rather small exchange, an investor can buy shares on the Botswana bourse through four brokers, namely Stock Brokers Botswana, Motswedi Securities, Capital securities and African Alliance.

Victor Zirebwa at Capital Securities briefed Moneyweb Botswana on how to buy shares on the BSE. He said initially an investor has to fill out application forms with the relevant stock broker of choice and activate an account. A copy of one's ID is needed with the application. The whole process takes a maximum of a day if all documents are presented with the necessary information.

Once all the above is set, the investor is ready to buy shares on the BSE said Zirebwa.

If you are wondering what the broker's commission is the table below shows the sliding scale of commission fees:

First	P0.00 - 50,000	2%
Up to	P50,001 - P100,000	1.5%
Excess	Over P100,001	1%

Source: Botswana Stock Exchange

One thing to note, however, is the lack of liquidity on the BSE. According to Thapelo Tsheole, BSE product development manager, lack of liquidity is one major hurdle that the bourse will have to overcome. He told Moneyweb Botswana that there is usually a higher demand from buyers than sellers.

BSE CEO, Hiran Mendes said that BSE's liquidity is comparatively low relative to regional stock exchanges. He cited the reason for low liquidity is that the BSE is dominated by local institutional investors, mainly pension funds and asset managers "whose investment strategy is mainly to buy and hold".

The reason investors hold on to their stocks, according to Tsheole, is because of a lack of alternative investment products.

Before buying stocks, it is always advisable to know the performance of the particular stock market and counters listed. In the next article, we will look at the past performance of the BSE and analysts' current forecast of the market.

Write to John Chombah: johnc@moneyweb.co.za