![\"\"](\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/10\/JSE-Johannesburg-Stock-Exchange.jpg\")
<\/p>\n<\/p>\n
The JSE has seen a spate of delistings over the past few years \u2013 a trend projected to get worse \u2013 and this jeopardises the bourse and South Africa\u2019s economy.<\/p>\n
This is the warning from AmaranthCX director Paul Miller, who told Kaya Biz that his organisation anticipates at least 27 delistings from the JSE this year.<\/p>\n
He added that there will likely only be seven new listings on South African exchanges, of which four will be on the JSE.<\/p>\n
This is the worst year for new listings since AmaranthX\u2019s records began in 1990.<\/p>\n
\u201cI suspect if you went back further, it looks like this year will be the worst year for new listings in half a century,\u201d he said.<\/p>\n
Delistings are normal and take place in any economy. However, the problem in South Africa is that they are not being replaced with new listings.<\/p>\n
Miller said there are many reasons for this, and discussions around this topic often only focus on one or two reasons.<\/p>\n
\u201cPeople are quick to blame the JSE, saying its regulations are too onerous or its costs are too high,\u201d he said.<\/p>\n
\u201cAlternatively, they are quick to say that it\u2019s an international trend, and when the interest rate cycle turns, we\u2019ll see people returning to the market.\u201d<\/p>\n
\u201cYes, those are important, and they\u2019re not untrue, but they are only a tiny part of the story.\u201d<\/p>\n
Since the global financial crisis, South Africa has seen an exit from the smaller end of the market, i.e. the 200 companies outside the top 100 large institutions on the JSE.<\/p>\n
\u201cWe\u2019ve also seen massive consolidation in institutional investors, and the institutions are managing their funds with liquidity and size in mind,\u201d he said.<\/p>\n
\u201cSo they\u2019re only interested in investing in perhaps the top 80 or, if you\u2019re lucky, the top 100 companies. There\u2019s very little interest in anything outside of that.\u201d<\/p>\n
He said another issue is that the nature of South Africa\u2019s stockbrokers has completely changed.<\/p>\n
\u201cThey\u2019ve become wealth managers, they earn annuity asset management fees, and their investment strategies now mimic the same investment strategies of the large institutions,\u201d he said.<\/p>\n
\u201cSo we\u2019ve got really nobody to invest in the 200 companies outside the top 100.\u201d<\/p>\n In addition, Miller said South Africa has not seen significant primary capital raising in years.<\/p>\n He said the country has not seen a significant public offer of shares by a company since 2012, and the last true initial public offering (IPO) was Telkom in 2006.<\/p>\n \u201cSouth Africa has a public capital market that punches way above the weight of the underlying economy,\u201d he explained.<\/p>\n \u201cWe\u2019ve got the 20th largest public market and the 40th largest economy. So here we have a real gem, a real material advantage for the development of our country.\u201d<\/p>\n \u201cAnd I believe our policymakers don\u2019t understand the problem, and they\u2019re allowing it to wither away.\u201d<\/p>\n He explained that the problem is not that the JSE will eventually no longer have any listed companies if this trend continues.<\/p>\n The top 100 companies will always be there, but the country is on a trajectory that will see only 100 companies listed on the JSE.<\/p>\n This means that, in the next ten years, South Africa will go from a market that had 800 companies 30 years ago to a market with only 100 companies.<\/p>\n He said this does not only affect South African inventors, as the JSE serves a societal purpose.<\/p>\n \u201cA public company with proper governance with a listed share trading on the stock exchange is providing a public good to pension funds,\u201d he explained.<\/p>\n \u201cIt provides somewhere where pension funds can put our money while we\u2019re working so that we can save and provide for our retirement.\u201d<\/p>\n \u201cAnd if we don\u2019t have public companies listing their shares, we don\u2019t have anywhere to put that money.\u201d<\/p>\n Public markets also provide a means for growing businesses to mobilise capital.<\/p>\n \u201cAnd sure, not all of them will grow to be in the top 100, but things will get built, things will get done, new factories, new farms, new mines, those need to be funded somehow.\u201d<\/p>\n \u201cAnd historically, the public market has been the place to raise that money, and we\u2019re giving up on it. It is withering before us.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" The JSE has seen a spate of delistings over the past few years \u2013 a trend projected to get worse \u2013 and this jeopardises the…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1475","post","type-post","status-publish","format-standard","hentry","category-innov8ions"],"_links":{"self":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/comments?post=1475"}],"version-history":[{"count":1,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1475\/revisions"}],"predecessor-version":[{"id":1478,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/posts\/1475\/revisions\/1478"}],"wp:attachment":[{"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/media?parent=1475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/categories?post=1475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.innov8fs.co.za\/blog\/wp-json\/wp\/v2\/tags?post=1475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.innov8fs.co.za\/blog\/wp-content\/uploads\/2023\/10\/Paul-Miller-1024x576-1.png\")