Important to pick right tent in a political storm

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.