Money and Markets

Shock slump in JSE’s share price wipes out R1 billion – here’s what happened

Business Insider SA
jse share
JSE's share price. Source: Sharenet
  • JSE Limited, which operates the Johannesburg Stock Exchange, saw its share price slump by 10% on Monday.
  • The company warned that its interim headline earnings will up to 35% longer than in 2018.
  • Trading volumes on the JSE look depressed, with foreigners bailing on local shares.
  • For more stories, go to Business Insider SA.

On Monday morning, JSE Limited, which operates Africa’s biggest stock exchange, warned that its profit for the six months to end-June will be up to 35% lower than in the same period last year.

This triggered a painful slump, which wiped out more than R1 billion of its market capitalisation. By late afternoon, its share price was down almost 10%.

The JSE makes most of its money from trading fees, which are levied when investors buy and sell shares and other investments that are listed on the exchange.

Trading in shares has been depressed, with foreigners – which own more than 40% of the shares on the JSE – bailing out of the local market.

In the year to date, foreigners have sold R31 billion more South African shares than they bought, according to an analysis by economics platform South African Market Insights. In the same period in 2018, foreigners were net buyers of R6.4 billion in local shares.

Last week alone, only 1.7 billion shares were traded on the JSE – compared to more than 3 billion in the same week last year, a fall of 43%.

From being the 16th largest stock exchange in the world at the end of last year, the JSE is now number 19. 

On Monday, the JSE said while its results were “disappointing”, it "largely reflects the reality of the difficult economic environment in South Africa which, in turn, impacts investor appetite”.

Its profitability has also been hurt by spending on new staff and technology, as well as its decision to lower trading fees. This comes as the JSE, for the first time in its 130-year history, is facing competition from new bourses like ZARX, A2X and 4AX

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