JSE in high spirits as it eyes Africa
Since Anheuser-Busch InBev listed on the JSE last week, a precursor to its purchase of SABMiller, the average daily trade of shares of the two companies accounted for 10% of all listed companies.
Donna Oosthuyse, JSE director of capital markets, told City Press that the AB InBev listing, and that of the Botswana-based Choppies franchise last year, is why the JSE is bolstering its sojourn in Africa to promote cross-listing with capital markets in other African countries.
The Oxford Business Group, which publishes investments and economic reports on 30 countries, hailed the JSE for its improved regulation and supervision. It suggested that the JSE could list far more companies from outside South Africa because market players were keen to capitalise on the JSE’s success, and establish South Africa as the centre for listing and derivatives trade for the region.
Oosthuyse said the strategy was to ensure that any listing benefits both the local market and the country from which the listing emanates.
Among the JSE’s initiatives to support the development of capital markets in Africa is the recent signing of various memorandums of understanding with other stock markets.
“We’re the largest exchange by far, but we believe there’s a lot of work we can do to attract business from the rest of Africa, and business that has a win-win element to it. We’re also looking at secondary listings for companies that are listed on other African markets,” said Oosthuyse.
The JSE is looking for more local and international companies to replicate the success of the AB InBev and Choppies listings. While delistings have not outstripped listings, the JSE only managed to list more than 20 companies a year for the first time in 2014 since the 2008 economic meltdown.
“We had a great example of that last year, when Choppies came and listed on the JSE. To me, that was a fantastic example of the potential of African capital markets integration. Here’s a company that has its primary listing on the Botswana Stock Exchange. It came to South Africa and raised a significant amount of capital, listed on our main board and now its expanding in South Africa. That was the primary reason for the listing: to fund its expansion into east Africa,” said Oosthuyse.
“It also shows the attraction of the South African market for companies in other parts of Africa because we’ve become accustomed to seeing South African companies go into the rest of Africa, like Shoprite and MTN, but we’re not that accustomed to other African companies coming to our market to raise capital. Choppies is such a good example of the African integration story – showing how you can be from Botswana, list in South Africa, and invest those funds in Kenya and other countries,” she said.
The Oxford Business Group report said the JSE should use its number one ranking in the world for the ability to raise equity capital in the local market to make it the centre of African trading.
“As the soundest and safest market in Africa, the JSE stands to benefit as issuers seek listings, corporations look for hedging solutions and investors seek opportunities. The market will continue to be buffeted by international factors and a weak global economy, but it should do well over time as its fundamental strengths allow it to operate well, regardless of the environment,” said the group.
But Oosthuyse was also aware that growing the JSE’s business and attracting global clients would be difficult, particularly at a time when markets are volatile.
“Notwithstanding the turbulence that we’ve seen, we started the year with some very good news with the listing of AB InBev that added R3.1 trillion to the market capitalisation of the JSE, and it’s now the largest listed company in our market. It is one of the five largest consumer goods companies in the world and it’s the largest brewery in the world,” said Oosthuyse, who is not concerned about the number of companies that are delisting.
“We’re still net positive. We’ve had more listings than delistings. One of the reasons we have delistings is if a company is acquired by another one, so it’s not always bad news when there’s a delisting,” said Oosthuyse.
To enable the JSE to attract more companies, it has introduced a concept of real estate investment trusts, which accounted for the largest number of listings in 2014 and last year.
It has introduced another concept called special-purpose acquisition companies, where investors can raise cash, list the company on the exchange and then have two years to look for a company to acquire.