ANC policy fears put listings on hold

NEW LISTINGS on the JSE are drying up as companies weigh the possibility of government takeovers and transaction tax changes deterring investment, according to bourse operator JSE Limited.

No new companies had listed shares this year after the exchange recorded 16 in 2011, chief executive Nicky NewtonKing said in an interview this week. A total of 10 exchangetraded products had joined the bourse in 2012, in addition to last year’s 14, she said.

Concern was growing that the ANC might move to nationalise companies this year, while new transaction taxes would add to trading costs, Newton-king said.

On Tuesday JSE Limited reported a 12 percent jump in trading volumes for the year to December, while headline earnings a share rose 29 percent to R5.62, just below the R5.64 median estimate of four analysts surveyed.

“The reality is that while we are in a year of the ANC’S policy conference and leadership elections, that does create an environment which has heightened uncertainty,” Newton-king said. “From a policy perspective, certainly when we talk to potential issuers, they consider us relative to other jurisdictions.”

ANC party members vote for a new leadership in December and will discuss mine ownership at a party policy conference in June, according to Enoch Godongwana, the head of the party’s economic policy committee.

The push for a policy shift has been led by the ANC Youth League, which wants the government to seize mines, banks and land. Several senior government ministers have rejected nationalisation, and on February 29 the ANC expelled Julius Malema from its ranks.

Malema said he planned to appeal the expulsion, while the league has vowed to push nationalisation without Malema.

The proposal to eliminate a rule that makes brokers exempt from securities transaction taxes announced in the Budget on February 22 was under discussion with the Treasury, Newton-king said.

“Our conversations with the Treasury are going well,” she added. “We need to understand what their concerns are about how people are currently accounting for their transactions.”

The JSE would sign cooperation agreements with other exchange operators similar to those it has with CME Group, the Chicago-based derivatives exchange, and the London Stock Exchange (LSE), rather than merging with or acquiring other bourses, Newton-king said.

Mauritius’ Financial Services Commission blocked plans for the JSE to buy a 49 percent stake in the Stock Exchange of Mauritius in 2009.

Moving the JSE’S trading platform back to Johannesburg from London in July would be positive for revenue as clients would trade faster and the bourse would offer them information technology-related services, Newton-king said.

The platform was moved to the LSE in 2002 as volumes exceeded the capacity of the Johannesburg exchange’s system at the time. JSE Limited fell 1.01 percent to close at R78.70 yesterday. – Bloomberg