The JSE, the company that operates Africa’s largest stock exchange, says SA’s low interest-rate environment put pressure on its finance income in 2021, but it is pleased with its operational delivery in what are volatile markets, and has upped its dividend payout.
The JSE’s revenue depends on the level of market activity, with its market share by value of trade 99.75%. Operating revenue grew 3% to R2.52bn in the group’s year to end-December, but profit fell 7% to R722m, with finance income falling more than a quarter due to interest rates hovering at a five-decade low for much of the year.
The JSE upped its ordinary dividend for 2021 by 4% to 754c, also paying out a 100c special dividend, bringing its payout to R741m, from R630m in the prior year.
“The JSE has delivered robust performance under a challenging macroeconomic and trading environment,” CEO Leila Fourie said in a statement.
“Our resilience while navigating an unfamiliar route through the pandemic has confirmed the value of the investments we have made in our technology platforms over an extended period,” she said.
There were seven initial public offerings in 2021, from four in the prior year, while 24 companies delisted, up from 20 in the prior year.
Regulatory burden
The JSE noted that in 2021 delistings were largely due to changes in company structure, such as mergers & acquisitions.
The local bourse has seen its number of listed companies about halve over the past two decades, with SA’s market also digesting news on Tuesday that PSG is the latest company looking to delist. PSG cited the regulatory burden it had to deal with, and the hefty discount at which its shares trade.
The total market cap of JSE companies grew 15% to R20.5-trillion, with the JSE saying it recognises the negative effect of delistings, and that it is working on cutting red tape.
Fourie said this is a major focus, with the group’s consultation process to cut red tape, launched in 2021, having been well received.
The JSE is also putting in much effort to attract dual listings from foreign exchanges, said Fourie, that set the bourse apart from its emerging market peers.
“The issue … is we have a history, and a legacy, of growing successful companies that have gone on to unlock value for shareholders and narrow the margins at which their shares trade,” she said.
Foreign interest
The company said it is encouraged by recent foreign interest in SA’s market, remaining confident in its cash generation after bringing in record revenue in 2021.
The local bourse is optimistic about 2022, which has already seen R7bn in net foreign inflows, with SA looking attractive when compared to emerging market peers such as Turkey and Russia.
“We are starting to see the turn of the tide,” she said. “Because of the dislocation in Russia, and the displacement of emerging market flows, we could see more liquid markets and more favourable ratings.”
By the market close on Tuesday, the JSE’s share price had gained the most in three months, up 4.24% to R124.50.
Update: March 1 2022
This article has been updated with additional information throughout.
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