The disturbing truth is starting to sink in

Is it the beginning of the end of the JSE, as we knew it? For stockbrokers tallying up after a day of just R11bn traded, it certainly is beginning to feel that way. Monday was one of the worst days for market activity in recent times and to put R11bn into perspective, that’s the kind of value you normally see traded over Christmas.

But averages have dwindled, too: to around R14bn-R15bn, with at least 15% of daily trade down to just one share: Naspers. It would be kind to attribute our slump in volumes to the northern hemisphere summer holidays, or to the fact that we no longer have a company such as SABMiller to draw big interest. (Its successor, AB InBev, does not qualify to be part of the JSE’s top 40 stocks given that it doesn’t have a big enough free float of local investors).

The more disturbing truth of the JSE’s paltry volumes is that a dwindling economy, with dwindling prospects, where growth shrinks and companies retrench to survive is not the sort of place to excite the animal spirits of those keen to make money.

While SA’s bonds have attracted interest given the appeal of their yields, the same cannot be said of local equities.

This should be as much a wake-up call to policymakers as international opinion pieces such as Tuesday’s read in the Wall Street Journal. Would-be investors may not even have gone past the headline: “President Ramaphosa tries the Zimbabwe and Venezuela way.” In a world of other opportunities, they don’t need to.

It was a peculiar proposal from the start, but given the close ties of the two parties involved it was one that looked as though it could have been sorted out over a cup of coffee.

Instead, this week, two-anda-half months after announcing the proposed transaction, African Equity Empowerment Investments (AEEI) and AYO told the market that AYO’s proposed purchase of a 30% stake in British Telecommunications SA (BTSA) owned by AEEI was on hold. The agreement had lapsed and the parties were engaging to have it reinstated, said the joint Sens announcement, adding that shareholders would be advised should it be reinstated.

So much for the view that this was a done deal because Iqbal Surve, the key player in the ultimate controlling company, Sekunjalo, wanted to access his share of the R990m AYO was going to pay AEEI for the BTSA stake. The thinking was that Surve would use the cash to repay some of the loans provided by the PIC in 2013 to enable him to get control of Independent Media. According to the PIC, by March 2017 the consortium, whose lead sponsor was Surve, owed just more than R1bn with R408m due in August 2018. The failure of the two related parties to reach agreement on the BTSA stake also raised uncertainty about AYO’s strategic partnership with Sasol. The agreement, which involves Sasol’s communications needs, was apparently based on BTSA’s work for Sasol.

An AEEI spokesperson explained that the Sasol/AYO agreement was part of an “alliance agreement” between AYO and BTSA designed to acquire a bigger market share from “various customers that require broad-based empowerment spend and service supply”. It is not affected by ownership of the BTSA stake.