Stock exchange seeks to attract new listings at Indaba

The JSE will attend the 2016 Investing in African Mining Indaba to list basic resources companies that do not yet trade on Africa’s largest stock exchange, states JSE capital markets director Donna Oosthuyse.

The JSE’s objectives are to profile the stock exchange as an ideal listing destination and provide its institutional network with a platform that will allow for engagement with South African and African mining companies with regard to making equity investments.

In addition, Oosthuyse says the Cape Town-based Mining Indaba will enable the JSE to identify potential investors and assist them in developing a better understanding of the benefits of partici- pating on the JSE’s capital markets.

Of the 391 companies listed on the JSE, 68 are associated with basic resources and comprise mining and industrial metals companies. Of those 68 companies, 36 are dual-listed.

The basic resources sector contributes 11% – about R1.3-trillion – of the overall JSE market cap of R11.7-trillion.

“We have a good pipeline of potential listings across sectors,” states Oosthuyse, adding that there are several factors, including banks’ ability to lend, and valuations on public markets that could influence firms’ decision to list.

The JSE is often considered an attractive exit alternative when public-enterprise investors decide to exit the public market, she says.

Ultimately, a decision to list remains with the company and its directors, and timing is an important element in their consideration.

In 2014, the JSE amended its listing requirements to make it easier and more cost effective for companies listed on accredited exchanges, including the ASX, LSE, NYSE, NYSE Euronext and TSX, to fast-track their listing on the JSE’s bourse.

The amended listing requirements now mean that the issuer does not need to produce a prospectus when listing on the JSE and that the listing approval time has been reduced to about two or three weeks, explains Oosthuyse.

The JSE has noted the impact of the commodities slump in the share prices of listed mining companies, which have also experienced significant lows and a reduction in their market capitalisation.

Listing activity is cyclical by nature and it is to be expected that it will follow movements in
the business cycle. The world economy has started to show signs of recovery, and the JSE expects that more companies will come to market again as the world economy finds a firmer footing, adds Oosthuyse.

She notes that there has been a significant increase in trading activity for the JSE’s cash-settled derivative contracts in crude oil, gold, platinum and diesel over the past year. Comparing 2014 with 2015 trading volumes, the JSE has experienced an over-375% increase in contracts traded, she adds.

Since the JSE also offers derivative products on various commodity products, it also aims to create awareness at the Mining Indaba about the products available and how these can be accessed to manage the price risk of commodities.

The Mining Indaba runs from February 8 to 11 at the Cape Town International Convention Centre.