Getting the most valuable JSE stock to list on its platform will certainly do a lot of marketing work for A2X. The stock exchange, which is partly owned by Patrice Motsepe’s African Rainbow Capital, already has 15 JSE-listed companies on its platform.
Being a secondary-listing stock exchange, A2X only accepts companies that are primarily listed elsewhere although its universe of stocks is confined to those listed on the JSE.
The listing of Naspers, on December 27, will add a company with a market capitalisation of more than R1.2-trillion and one of the most popular stocks, which should boost the liquidity of the exchange.
The JSE says that as more stock exchanges enter the market, investors will choose platforms that offer more liquidity so investors can get the right price.
It seems that from a price perspective, A2X is quite attractive. Looking at Standard Bank, for instance, it had an offer price of R170.93 about midday on Tuesday on A2X, which was close to the R171.00 at which it was trading on the JSE. However, in terms of trade volumes, the JSE is in a league of its own.
What probably counts in A2X’s favour is that doesn’t compete with the JSE as the other new fully fledged stock exchanges do. It only competes in the wholesale secondary market, much like the European Multi-lateral Trading Facility. A2X also benefits from the fact that there is no additional cost for JSE-listed companies when they join its platform and no further regulatory compliance is required.
No-one wants to see Edcon close its doors. Not the government. Not its thousands of employees. Not its creditors. And especially not its landlords.
The clothing retailer, which operates the Edgars, Jet and CNA chains, is struggling to survive. It has R7bn in debt and has to compete in a retailer market against aggressive rivals such as TFG, Mr Price and Zara.
Although it is in serious trouble, so many people and institutions are depending on it, the group in a sense is as close to being “too big to fail” in SA as you can get.
The government doesn’t want to see thousands of people unemployed, its creditors doesn’t want to go through the process of a messy liquidation and owners of SA’s largest shopping malls don’t want 10% of their space standing empty.
Its CEO Grant Pattison is right in believing that it’s various stakeholders are committed to the restructuring and recapitalisation of the group.
This means that Edcon’s banks won’t be calling in their loans, its landlords will agree to restructure its leases and its trade unions won’t be making huge wage demands.
Its restructuring will see it reduce its space and there are even rumours it could close some of its high street stores.
Edcon will likely survive — this time. But if it doesn’t get its act together, there will come a time when its creditors run out of patience and it could easily end up closing its doors like Stuttafords, which was also a cornerstone of the South African retail sector for decades.
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