JSE Boosts Initiatives to Increase Listings and Investment Flow

The Johannesburg Stock Exchange (JSE), the largest stock exchange in Africa, has been deploying a series of strategic initiatives to counteract the global trend of delistings and to revitalize volumes on the exchange. In an exclusive interview with CNBC Africa, the Head of Origination and Deals at the JSE, Sam Mokorosi, emphasized the multi-pronged approach aimed at encouraging both local and international companies to list and stay listed.

Mokorosi stated that while the JSE has not been immune to the worldwide wave of companies going private, the South African exchange's delistings are within historical norms. However, he flagged the need for urgent action to bolster the number of new listings, which has seen a more significant slump. The diverse strategies reveal the JSE's resolve to not only retain its current listings but also to significantly expand them.

Efforts to retain and attract new listings include revising the listing criteria to make compliance less burdensome. The move is designed to balance the essential aspect of investor protection with the practicality and cost implications for businesses. As part of this delicate balance, the JSE has introduced reforms such as permitting dual-class share structures, easing regulatory requirements, and allowing sector-specific Real Estate Investment Trusts (REITs) to be listed more easily.

Highlighting the success of these reforms, Mokorosi pointed to the recent listings of Premier Foods, Primary Health Properties, and Copper360 in 2023. These listings are a testament to the JSE's growing allure and improved measures to facilitate the listing process.

The JSE isn't just focusing on domestic growth but is also casting its net globally, seeking out potential companies in the UK, Europe, and Southeast Asia for secondary listings. This international outreach could bring a new dimension of diversity and investment opportunities to the JSE.

This shifted approach comes at a time when global capital markets undergo significant changes, with many companies choosing private equity and venture capital routes over public listings. The JSE's proactive stance is thus not only crucial to its sustainability but may also set a benchmark for other exchanges dealing with similar challenges.

Moreover, to enhance the liquidity of small-cap stocks on the exchange, the JSE has ramped up efforts in unlisted fundraising. This is an innovative move to draw in investments that traditionally bypass public markets, opening an avenue for growth for smaller enterprises and potentially increasing overall market activity.

Potential investors and listed companies are encouraged to consider the JSE's new measures as they revisit their financial strategies. However, it is also important for them to weigh the specifics of these changes according to their unique financial situations and seek appropriate legal and financial advice before proceeding.

Given the advancements and strategic positioning, the JSE is poised to revitalize the South African equity landscape. While market dynamics present challenges, the new steam gained through the JSE’s initiatives appears promising for the future of the exchange and its stakeholders.