Business Insider Edition

South Africa’s new stock markets started to nibble the JSE’s lunch this year

Justin Brown , Business Insider SA
 Dec 30, 2019, 07:13 AM
  • The market value of securities listed on SA's four new stock exchanges reached more than R1.9 trillion in 2019.
  • The four markets saw 47 new listings in the past two years, while the JSE only had 39 in the same time.
  • While the JSE continues to dominate trading, the new exchanges offer cheaper deals for investors, listed companies and brokers.
  • For more, go to Business Insider's home page

This year, the market value of securities listed on the four new stock exchanges that are challenging the JSE’s dominance reached more than R1.9 trillion.

The four new bourses - 4 Africa Exchange (4AX), A2X Markets, Equity Express Securities Exchange (EESE), and ZAR X – were launched in the past two years after new legislation opened up the market to new competitors.

The new exchanges offer deals for investors, listed companies, and brokers that are much cheaper than the JSE. The exchanges have other benefits too.

ZAR X, for instance, provides a much faster settlement of share trades than the JSE does. ZAR X settles trades on the day of trade while the JSE takes three working days after the day of trade to settle.

The four markets have different strategies in cornering the market: A2X Markets encourages JSE-listed companies to take up secondary listings, while unlisted companies are the target market for 4AX and ZAR X.

EESE’s strategy has been to attract empowerment companies.

In total, the four exchanges host 46 stocks. The JSE, which has been in existence since 1887, has 354 shares on its books, which the bourse’s lowest number of listed stocks in more than 16 years.

About 47 stocks have listed on the four competing exchanges since 2017 while only 39 have listed on the JSE during the same time.

Seventy-three stocks have delisted from the JSE since 2017 but only one stock, as a result of a merger with a share on the same exchange, has delisted from the four new exchanges since 2017.

By mid-December, the market value of the four exchanges (R1.9 trillion) was still some way from the JSE’s R17.5 trillion, and trading on the JSE continues to dominate: A total of R3.6 billion in value has traded on the four exchanges since 2017, compared to R16 trillion on the JSE.

A2X Markets

This exchange, in which Patrice Motsepe’s African Rainbow Capital has a 20% stake, has 33 listed securities including Naspers, Standard Bank, and Sanlam.

Seventeen securities listed during 2019.

Since A2X’s inception in October 2017, the total value traded was R2.3 billion.

Kevin Brady, A2X CEO, says: “At this stage, we only offer secondary listings, so no primary listings.”

“Of the 33 secondary listings, three are exchange-traded funds (ETFs), two are exchange-traded notes (ETNs), and the rest are companies,” he says.

Absa’s gold, platinum, and palladium ETFs are listed while the two ETNs are Investec’s Top 40 total return index (Tri) and Swix Top 40 Tri.

4AX

This bourse has five listed shares and the total value traded on the exchange since its inception in September 2017, until the end of November 2019, was R458 million, according to the bourse’s CEO Eugene Booysen.

The listings of iHealthcare Group Holdings and iHealthcare Group Limited were going to take place this month but were delayed until 2020, Booysen said.

ZAR X

ZAR X, which has five listed stocks, started trading in February 2017, and since then R182 million worth of shares have changed hands, according to ZAR X head of systems operations Nicholas Harrison.

Transformation Investment Portfolio and Dale Capital Group listed on the ZAR X in 2019.

EESE

The bourse, which has four listed shares, had one delisting since its inception when  Multichoice's BEE scheme Phuthuma Nathi 2 was delisted and merged with Phuthuma Nathi.

Value traded since EESE’s inception on 8 December 2017 until 17 December 2019 was R682 million.

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