While stock exchanges in the rest of the world are enjoying listings booms after successful Covid-19 vaccination rollouts, there is not much activity on the JSE in that regard. The question is what the exchange is doing to attract companies and to encourage young people to buy shares instead of other assets.
The country’s largest stock exchange is supposed to be the premium place on which companies can list in SA but ambitious businesses aren’t lining up. The exchange is also shrinking.
In June the JSE Ltd, the company that administers the bourse, said its earnings for the six months to end-June were expected to fall close to 25% as lower volumes through its bond and equity platform led to a decline in commissions over the period.
That’s dire. What’s even worse is that the JSE Ltd has underperformed its core all share index. Its market capitalisation has halved against the all share in the past three years.
The exchange did recently buy Link Market Services, a share registry, custody and investor service provider serving public and private markets. CEO Leila Fourie said the JSE is also developing a number of products to assist small and medium-sized enterprises in raising capital and to administer investor functions.
But where are the listings?
As many as 137 companies delisted from the JSE between 2015 and 2020, outpacing the exchange’s 83 new listings over that time. There have been 14 more delistings so far in 2021.
Meanwhile, other exchanges are flying. The tech-focused Nasdaq welcomed 410 initial public offerings in the first half of 2021, raising $106bn, the highest level of proceeds raised on record since 2008. These initial public offerings (IPOs) included Bumble, Applovin and Playtika.
Globally, a high of almost $350bn was raised through IPOs in the first six months of 2021, according to data compiled by Bloomberg, surpassing a previous peak of $282bn for the second half of 2020.
It’s time for the JSE to show SA why it will should be the exchange of choice in the years to come.
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