Trading on JSE dwindles
Trading volumes on Africa’s biggest stock exchange have dwindled amid uncertainty about the ruling party’s policies on land and mining ahead of elections set for next year.
The average daily volume of shares traded on the JSE in the past month fell to 247 million on Wednesday, from as high as 408 million in January. On Monday, only 151 million shares changed hands, the lowest number since January 2.
While the drop-off may be ascribed partly to global factors, including the trade war between China and the US and the withdrawal of monetary stimulus by developed-nation central banks, local political developments are also to blame, according to exchange operator JSE. The euphoria that greeted President Cyril Ramaphosa’s election has dissipated, while uncertainty around land reform and mining ownership are rattling investors.
“There is careful scrutiny around the country around our policy discussions and uncertainty as we go into elections next year,” Donna Nemmer, director of capital markets at the JSE, said. “Investors are taking a wait-andsee approach.”
Trading volumes fell in June and July and are on track for a decline in August, a month in which trading has picked up in four of the past six years, according to data compiled by Bloomberg. A decline in August would represent the first time in two years that trading volumes fell in three consecutive months.
The rand sank last week after talks to amend the Constitution to allow land seizures without compensation arose. Ramaphosa reiterated comments that reforms won’t harm the economy, agricultural production or food security.
Nedbank said this week it expects home loan growth to slow as the debate deters investment.
There’s also little clarity about new rules to govern ownership of mines and mineral rights. SA risks driving away new investment and crippling its mining sector if “reckless” new rules are implemented, AngloGold Ashanti’s Sipho Pityana said last month as negotiations between mining companies and the government dragged on. – Bloomberg
Investors are taking a wait-and-see approach. Donna Nemmer Director of capital markets at the JSE