Im­por­tant to pick right tent in a po­lit­i­cal storm

Financial Mail - Investors Monthly - - Editor's Note - MARC HASENFUSS email Marc on hasen­fussm@times­me­dia.co.za

INot be­cause I let COULDmy wife KICK book MY­SELF.a camp­site in the back­woods over Easter, but be­cause I fluffed a golden op­por­tu­nity to snag some well-priced shares in JSE Ltd.

Shares in the JSE — very much like thetent-that-Marc-erected — have un­cer­e­mo­ni­ously folded into a de­press­ing heap. At the end of June last year the JSE was at a high of R185, but ear­lier this month had sagged to a 12-month low of R123.

I have been an ad­mirer of the JSE as a spe­cial­ist fi­nan­cial ser­vices com­pany. I en­joyed the saga, some years back, when Jan­nie Mou­ton’s PSG Group (which knows about smart in­vest­ing) ac­cu­mu­lated a sig­nif­i­cant mi­nor­ity stake in the JSE.

PSG un­suc­cess­fully chal­lenged the reg­u­la­tory limit that re­stricts the share­hold­ing of a sin­gle in­vestor in the JSE. It was fun while it lasted, and PSG’s ef­forts high­lighted the at­tributes of the JSE — in par­tic­u­lar that the com­pany op­er­ated as a mo­nop­oly.

Tech­ni­cally speak­ing the mo­nop­oly is no more since new stock ex­change li­cences have been is­sued or are in the process of be­ing is­sued.

But these fledg­ling op­er­a­tions are surely not go­ing to take too much wind out of the JSE’s sails — even in the long term. For now the JSE can take com­fort that some se­ri­ous play­ers have not con­tem­plated tak­ing their list­ings to other newer bourses. I doubt fish­ing com­pa­nies Sea Har­vest and Premier Fish­ing, spun out of ex­ist­ing JSElisted in­vest­ment com­pa­nies, even dis­cussed list­ing else­where. The re­cent list­ing of Brian Joffe’s new Long4Life — ac­com- panied by a R2bn cap­i­tal rais­ing — re­it­er­ates the “de­fault” sta­tus of the JSE. Per­haps the JSE’s great­est at­tribute is its global grav­i­tas, with list­ings like An­heuser-Busch, BAT and Glen­core (among oth­ers), while be­ing mostly in­su­lated from com­pe­ti­tion from other bourses by govern­ment’s in­sis­tence on ar­chaic ex­change con­trols.

Ad­mit­tedly, new stock ex­changes will prob­a­bly tap niches where the JSE will be re­luc­tant to com­pete too in­tensely, and I sus­pect one or two new­com­ers will find prof­itable trac­tion in such en­deav­ours. In­creased com­pe­ti­tion will, iron­i­cally, prob­a­bly sharpen the JSE’s of­fer­ing(s).

Per­haps more than the on­set of com­pe­ti­tion is the no­tion that jit­tery in­vest­ment sen­ti­ment will mute JSE trad­ing vol­umes.

Af­ter events that lead to a reshuf­fle of the cab­i­net and the down­grades by ratings agen­cies, ob­servers might re-think the no­tion of muted vol­umes on the JSE.

The sheer vol­ume of po­lit­i­cal mis­sives fly­ing about should give pro­fes­sional in­vestors new op­por­tu­ni­ties ev­ery day.

At the time of writ­ing the JSE share price had re­bounded some­what. I sus­pect I have missed a chance, though the cur­rent rat­ing is hardly ex­ces­sive. Then again, I may well get an­other shot at R125 . . . or lower if the prover­bial tent comes down, po­lit­i­cally speak­ing.

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