JSE Battles Delistings Crisis amid South Africa's Economic Woes

The Johannesburg Stock Exchange (JSE), the largest stock market in Africa, stares down the barrel of an existential crisis, compounded by a languishing South African economy. In recent times, the JSE has seen a significant reduction in listings with companies moving to operate in the softer regulated private market.

Historically one of the oldest public markets, the JSE's crisis could be viewed as a reflection of South Africa's broader economic predicament dominated by a select group of conglomerates. Despite the efforts of Trade, Industry and Competition Minister Ebrahim Patel to dilute this concentration, the top 40 stocks listed on the JSE still represent a bulk 80% of the total market capitalisation.

Given the current economic landscape, companies are cocooning and refraining from expansion. They are understandably wary of investments unsupported by reliable infrastructure, like consistent power supply or effective transport logistics. This grim context is making capital raising—typically a sign of thriving stock markets—a redundant concept.

The South African government under President Cyril Ramaphosa has been encouraging private sector participation—essentially privatisation—particularly in the monopoly sectors of rail, ports, and electricity. By this logic, this should theoretically invigorate the JSE through new entrants requiring capital. However, the political and structural uncertainties continue to cast a shadow, deterring potential investors.

The high costs of listing and compliance, which disproportionately favour public relations outfits like attorneys, auditors, and accountants, also exacerbate the fall of listings. For the JSE to resuscitate, it needs to build bridges with stakeholders in the financial media and coin pragmatic solutions to this crisis.