World

BOTSWANA is resigned to a prolonged period of weak diamond prices with serious implications for the budget of the southern African nation, where the gems are a vital source of income.

The Finance Ministry warned that mineral revenues could end the 2025-2026 financial year at just 10.3 billion pula ($744 million), less than half of the 25.3 billion pula historic average.

“The recovery in mineral revenue is expected to be prolonged,” it wrote in a strategy paper ahead of the annual budget next month. “The shortfall is likely to persist over the medium to long term with a possibility of a non-recovery.”

De Beers on Monday announced it was cutting diamonds prices for the first time since late 2024, bowing to slumping demand as Chinese luxury spending retreats, the popularity of synthetic stones rises and US tariffs hit India, the world’s largest diamond exporter.

The Finance Ministry said rough diamonds were expected to sell at $99.3 per carat at the end of 2025 compared with $128.8 in 2024, extending pressure on Botswana’s public finances.

“In the context of elevated macro-fiscal pressures, government will prioritize restoring fiscal sustainability by strengthening expenditure discipline,” the paper said, noting the budget deficit was projected to narrow to 3.3% of gross domestic product in 2025/26 from 4.2% for 2024/25. –BLOOMBERG

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GLOBAL funds may withdraw more than $2 billion from Indonesian equities in coming months if MSCI Inc. proceeds with a change to its indexing methodology, underscoring concerns about the investability of Southeast Asia’s biggest stock market. 

The index compiler will decide by the end of January whether to tighten its definition of free float — the number of shares available for trading and a key determinant of a stock’s weighting – following industry feedback. Any approved changes would be effective in the index provider’s May review.

If MSCI finds that companies in Indonesia — which already have Asia’s smallest average free float — have even less stock available for trading than reported, passive investors would be forced to sell existing positions. The decision would be among the most consequential for the nation’s $971 billion equity market in years, with implications for fund flows and investor perception.

“This exercise serves as a key test of the country’s capital market reform agenda, underscoring the corporate governance improvements required to unlock greater international participation and long-term investment flows,” said Gary Tan, a portfolio manager at Allspring Global Investments.

Any withdrawals from Indonesian stocks will also pressure the rupiah, which fell to a record low on Tuesday amid heavy foreign outflows from the bond market. Investors remain concerned about the government’s commitment to keep the budget deficit within legal limits and preserving central bank independence.

In the big business of index compilations, free float is a relatively obscure but crucial metric. Benchmark providers like MSCI and FTSE Russell rely on it to measure how easily investors can buy a stock – the more shares available for trading, the higher the potential weighting in an index. When free float is low, stocks can become what Aletheia Capital Analyst Nirgunan Tiruchelvam calls “museum pieces: you can look but not buy enough.”

Low free float has already become a flash point in Indonesia, where many of the benchmark Jakarta Composite Index’s biggest members are thinly traded stocks controlled by a handful of wealthy individuals. Investors argue these volatile stocks distort the index, which masks true market performance and heightens the risk of manipulation. 

More than 200 stocks on the benchmark have a free float below 15%. Across major Asia-Pacific indexes, Indonesia’s benchmark has the lowest average free float, according to Bloomberg data. PT Samuel Sekuritas Indonesia is among several brokerages forecasting about $2 billion in foreign passive fund outflows if the rule is adopted.

The dislocation was evident last year, when the JCI outperformed the MSCI Indonesia Index by the widest margin ever. With so many JCI constituents thinly traded, fund managers say the benchmark is effectively untrackable, pushing them instead toward the more stringent MSCI Indonesia Index. The gap proved costly: the JCI surged more than 22% to a record, while the MSCI Indonesia fell 3%.

A reduction in free float numbers and a smaller weighting for Indonesia’s companies will likely just accelerate the divergence instead of narrow it, investors say. Still, MSCI has said that the potential changes offer “additional transparency” that could help address “information gaps”, according to an e-mailed statement.

In theory, free float math is simple: it’s the total number of shares minus those held by strategic investors like governments or founders. In practice, however, Indonesia’s opaque and web-like business relationships mean it’s difficult to identify strategic holders, a concern MSCI raised in its September consultation paper. 

The Indonesia Stock Exchange currently requires companies to disclose shareholders owning more than 5% of a company. MSCI said an additional data source, the Indonesia Central Securities Depository, can identify shareholder types for electronically traded stocks, including those holding under 5%, giving a clearer picture of true free float. 

One MSCI proposal would base free float on the lower figure from either public filings or the new dataset. By its own projections, that would shrink the free‑float market cap of 15 index names — resulting in outflows.

Regulators have sought to ease concerns with plans to raise minimum float levels to 10%-15% from the current 7.5% level. The longer-term goal is 25%, though no timeline has been set. That compares to Hong Kong and India’s 25% rule and Thailand’s 15%.

Companies with concentrated ownership include PT Petrindo Jaya Kreasi, which is 84% owned by billionaire Prajogo Pangestu, and PT Barito Pacific, in which Pangestu holds a 71% stake.

A Barito spokeswoman said the company’s free float stands at 27% under Indonesia Stock Exchange rules, while Petrindo’s is 15%. Barito would not be affected by any changes to MSCI’s methodology, she said. Petrindo would be impacted if the new methodology is implemented, though it would not face the largest outflows, she added.

The outlook may come with challenges. A tax rule that exempts individuals and companies from income tax when they reinvest dividends for at least three years encourages more corporate shareholding — precisely the type MSCI wants to exclude from free‑float calculations because it masks how much stock is truly in public hands.

Fear of missing out may also factor into the calculus. “Given Indonesian stocks’ long term upside potential, they’re too attractive for the index provider to keep reducing the weighting,” said Dimas Yusuf, chief investment officer at PT Sucorinvest Asset Management.

The financial regulator is also preparing stricter rules for small-company listings, though the bourse cautions the market will still need much more liquidity to absorb new shares when companies boost the amount available for trading.

That liquidity may ultimately not materialize, said Christopher Andre Benas, head of research at PT BCA Sekuritas, noting that institutional investors will remain selective and retail investors lack the cash to absorb the rest. –BLOOMBERG

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SHARES of Wise Plc jumped the most in more than seven months after the money-transfer firm gave an upbeat earnings guidance and said it’s on track to shift its primary listing to the US in the first half of this year.

The London-listed fintech reported an underlying income of £424.4 million ($570 million) in the three months through December, which exceeded the £412 million average estimate compiled by Bloomberg. Continued customer growth fueled the gains.

The firm is targeting a profit-before-tax margin of 13% to 16% in the medium term, and expects it to be at the top end of the range in the current financial year. “We remain on track to meet our guidance,” Kristo Käärmann, co-founder and chief executive officer said in a statement Tuesday. 

Shares rose as much as 13% in early London trading, the biggest intraday gain since June last year.

Jefferies said strong customer growth and performance of Wise’s Platform were “very encouraging.” “Investments into price, onboarding capacity and marketing are finally paying off,” the firm’s analysts Hannes Leitner and Charles Brennan wrote in a note.

Wise had applied to be a directly regulated bank in the US last year after announcing plans to shift its main stock market listing from London to the US. While it awaits a decision from the US Office of Comptroller of the Currency on its national trust bank charter application, CEO Käärmann said a listing there “will further increase our profile in the US” as it seeks to partner with more than 4,000 banks across the country.

Wise’s US business has grown to employ more than 750 staffers, including over 450 people in Austin. The fintech is now actively hiring dozens more staff, from engineers to key financial control roles.  

The firm’s cross-border revenue in the quarter was boosted 15% from a year earlier to £245.4 million, as the number of customers grew to almost 11 million from about 9 million from the same period a year ago.

More customers were holding money in their Wise accounts, with deposits increasing by 34% to £27.5 billion. About 75,000 customers in India joined its waiting list in a month, Wise said. It secured a conditional license in South Africa, as the firm goes toe-to-toe in new markets with European rival Revolut Ltd. 

For the full year, Wise said it expects administrative expenses to be about £1 billion, which it said would include approximately £35 million of costs associated with the dual-listing. The bulk of the increased spending so far this financial year has been tied to hiring, it added. –BLOOMBERG

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KUALA LUMPUR — Malaysia will take a cautious stance before endorsing a proposed Peace Committee for Gaza until Israeli attacks stop and humanitarian aid access is guaranteed, Prime Minister Datuk Seri Anwar Ibrahim said.

While Malaysia supports efforts to secure peace, Anwar said concerns remain over the committee’s composition and mandate.

This, he said, includes the possible involvement of the Israeli prime minister and former British prime minister Tony Blair, which was viewed as directly linked to the Iraq war and as lacking neutrality on the Palestinian and Gaza issues.

“In principle, we support initiatives to ensure peace. But we have reservations about the formation of the committee and those involved. Many of the announcements have yet to be confirmed,” Anwar told the Dewan Rakyat during Minister’s Question Time today.

He was responding to a supplementary question from Syed Saddiq Syed Abdul Rahman (MUDA-Muar) regarding Malaysia’s position on a proposal by United States President Donald Trump to establish a Peace Committee for Gaza. 

Anwar said the proposal cannot be considered a reasonable solution while Israeli attacks on Gaza continue.

“Agreements may have been signed, but attacks by the Zionist Israeli regime persist. The first step must be to stop the violence, and the second is to ensure access to food and basic necessities,” he said, noting that reconstruction initiatives, including housing proposals by Turkiye, have been blocked by Israel.

As such, he said Malaysia remains careful before offering support, adding that the matter will be discussed at the Cabinet meeting this Friday. The foreign minister has been tasked with obtaining the full list of proposed committee members.

Anwar also said Malaysia is consulting leaders from Arab states, Turkiye and others to gather their views on the proposal. — BERNAMA

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