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Administration financial markets south africa

Administration of Financial Markets in South Africa 2023

Stephen Timm | South Africa | 14 December 2023

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Report Coverage

This report covers the administration of financial markets in South Africa, including the activities of the stock exchange and other bodies that regulate or supervise the activities of financial markets, including exchanges for commodity futures contracts. It includes information on the major equity, bond and derivatives markets, market cap and equity performance, number of listings, red tape and expenses, finance income, corporate actions, exchanges in the rest of Africa and international exchanges, crypto products and cybersecurity issues. There are profiles of the JSE, by far the largest exchange, and the three other exchanges – A2X, the Cape Town Stock Exchange and Equity Express Securities Exchange.

Introduction

• The Johannesburg Stock Exchange (JSE), which was ranked the 19th largest exchange by market cap in September 2023, is suffering from declining volumes and a delistings trend. \r\n
• The volume and value of equity trades has come under pressure, while the number of companies listed on the exchange’s main board had declined significantly. \r\n
• South Africa has three alternative exchanges which are rapidly increasing their number of listings, particularly A2X. \r\n
• The country’s stock markets have experienced significant volatility driven by the Russia-Ukraine war, higher interest rates, inflation, fears of a global recession, greylisting, the elections planned for 2024 and loadshedding.\r\n
• Current trends include digitisation and an increase in sustainable financing products. \r\n
• A project aims to link up exchanges across the continent, which could boost intra-African trade.

Trends

• A number of exchanges internationally, including the JSE, have experienced increased delistings.
• Digitisation.
• Exchanges are investigating trading in digital assets.
• Exchanges are looking to increase the share of revenue they generate from non-trading fees.
• Growth in the number of listings on local alternative exchanges, which have relatively affordable and easy listing requirements.
• Sustainability and increasing demand for sustainability-linked products.
• The JSE has experienced a significant decline in trading volumes in 2023.

Opportunities

• Digitalisation is helping to lower trading costs.
• Helping SMEs to list by reducing listing requirements, setting up specific capital raising platforms or running support programmes.
• Listing of sustainability products and services such as green bonds and voluntary carbon trading markets.
• Providing non-trading services such as information and data services.
• The African Exchanges Linkage Project offers the chance for exchanges to facilitate investment across the continent.
• Tokenisation and crypto currency assets.

Challenges

• Delistings on the JSE, driven partly by a reported increase in listing regulations.
• Greylisting has affected capital raising.
• Increasing risk of cyberattacks.
• Opportunities to cross list African companies are complicated by the requirements of cross border clearing and settlement.
• Slow economic growth is reducing valuations.
• The JSE and several exchanges in Africa remain highly concentrated.
• The JSE has been criticised for the many requirements needed to list on the exchange.
• Trade volumes on the JSE have fallen dramatically in recent months.

Outlook

• Returns from South Africa’s financial markets have been affected by the slowing economy, loadshedding, geopolitical and local political challenges and greylisting. \r\n
• The JSE is facing declining trade volumes and an ongoing delisting trend which reduces liquidity. \r\n
• Stockbrokers say these trends are only likely to be arrested when the economy begins growing faster. \r\n
• Despite this, competition from three alternative local exchanges is expected to drive innovation and lower listing requirements at the JSE. \r\n
• The JSE remains Africa’s biggest exchange by market cap by a significant distance.

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Administration of Financial Markets in South Africa
Administration of Financial Markets in South Africa 2023

Full Report

R 20 000.00(ZAR) estimated $1114.16 (USD)*

Industry Landscape

R 14 000.00(ZAR) estimated $ 779.91 (USD)*

Table of Contents

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PAGE
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1 . Industry Value Chain 2
2.2. Geographic Position 4
2.3 . Size of the Industry 4
3. LOCAL 9
3.1 State of the Industry 9
3.2 Key Trends 19
3.3 Key Issues 20
3.4 Notable Players 20
3.5 Corporate Actions 21
3.6 Regulations 22
3.7 Enterprise Development and Social Development 24
4. AFRICA 25
5. INTERNATIONAL 28
6. INFLUENCING FACTORS 29
6.1 Economic Environment 29
6.2 Labour 30
6.3 Environmental Issues 30
6.4 Technology, R&D, Innovation 32
6.5 Input Costs 34
6.6 Cybersecurity and IT Risks 35
6.7 Governance and Fraud 36
7. COMPETITIVE ENVIRONMENT 37
7.1 Competition 37
7.2 Ownership Structure of the Industry 38
7.3 Barriers to Entry 39
8. INDUSTRY SUMMARY 40
9. OUTLOOK 41
10. INDUSTRY ASSOCIATIONS 41
11. REFERENCES 41
11.2 Publications 41
11.3 Websites 42
APPENDIX 1 - Summary Of Notable Players 44
APPENDIX 2 – Relevant Legislation 46
COMPANY PROFILES 47
A 2 X (Pty) Ltd 47
Cape Town Stock Exchange (Pty) Ltd (The) 49
Integrated Exchange (Pty) Ltd (The) 51
JSE Ltd 53