JSE profits down, costs increase

The JSE has reported a decline in annual revenue and expenditure that continues to increase.

The owner and operator of Africa’s biggest and most liquid market for shares, bonds and derivatives said its expenses for the 12 months to December increased 14% to R1.54 billion (2018: R1.35 billion) off a low base due to technology costs and additional personnel in a bid to become more competitive in the market.

Revenue decreased by 1% to R2.19 billion (2018: R2.20 billion).

In 2019, it reached an inflection point by establishing a strong platform on which to grow the bourse through the multiyear integrated trading and clearing initiative project for equity derivatives and currency markets.

“A number of new products were launched, including a tick-data-in-the-cloud solution; enhanced central order book trading functionality and monthly expiries in our derivatives markets,” the company said.

Decline in listings

The stock exchange was also hit by a decline in new equity market listings: from 12 in 2018 to five last year, causing a 5% decrease in listings revenue to R147 million.

JSE chief executive Leila Fourie attributed this to a global contraction.

“It is very much part of an economic cycle: we saw the same cycle in 2008,” she said. “So, in the downturn there seems to be more of a hit in the small and medium enterprises and where investors do not have an upper hand to invest in a less liquid stock. So we tend to see a lot of that stock delisting.

“What we have seen in the past year is that the market cap for the JSE cap increased by 38%.”

There is also a highly liquid market in SA because of the institutional bedrock of investors.

“Seventy percent of the assets are contained in the country because of the exchange controls….

“What we are doing about that is to partner with investment banks to identify the top stock in Mauritius, Africa and Southeast Asia to try and attract inbound dual investing,” she said. “We have a strong value proposition in the value of our markets.”

Bond listings increased from 539 to 710 in the year.

“So [we must] ensure we have a number of products. Because … when one market is typically down, you will find that one market is increasing..”