Sad story of departures and no listings boom

SOME PUNDITS RECKON the JSE is in a crisis. That might be putting it a bit too strongly. Still, I must say the steady exodus of companies — especially small- and mid-cap businesses — from the JSE is vaguely disturbing. As a journalist who has specialised in writing about small caps I have found that my universe of stocks to survey has crimped markedly over the past five years.

Compounding the problem for a shrinking JSE — by listing numbers, not necessarily collective market capitalisation — is that the local bourse appears to have missed the initial public offering boom that seemed to come around every 10-15 years. The JSE had listings booms in 1986 to 1988, again in 1996 to 1998 and most recently in 2007 and 2009.

The JSE is not seeing much new listings action now apart from a couple of spin-offs from existing large listings. I’m not even sure whether the more promising unlisted companies really look at the JSE as the only way to raise funding, considering that a fast-growing specialist business like fintech group Yoco has raised big sums of fresh capital easily from private investors clearly comfortable backing an unlisted venture.

There are suggestions that the JSE’s predicament should be addressed at a national level urgently — an intervention, if you will, to determine how the local bourse can play a critical role in economic development. Yes, I would be happy to see more technology ventures wending their way to the JSE. There are a host of well-established and fledgling unlisted businesses I would love to see there.

But then we forget that a listings boom — usually buoyed by retail investor exuberance — does allow the inevitable nohopers and long-shots to slip onto the market. Flip through a JSE Handbook from 2000 and 2010 and you’ll recognise a slew of names of companies no longer with us.

For now I will resume my regretful watch, interrogating every cautionary notice issued by a small- or mid-cap counter from the view that this could be another buyout offer to shareholders and a delisting.

On a happier note, my 10-stock selection made several months ago, when I felt the market was far too jaundiced about small caps, has returned a nifty 17% — and that’s sans dividends. Logistics specialist Santova (+42%), Tsogo Sun Gaming (+37%) and RCL Foods (+32%) were the star performers, with only Afrimat lagging (down about 10%). Hopefully none of these little beauties will be planning a delisting in the near future … though it’s difficult to see RCL staying listed under parent company Remgro’s new investment structure. Maybe RCL’s leaner and meaner chicken business will be given wings in an unbundling? ●