Stephen Gunnion
12 November 2008
Johannesburg — FOREIGN interest in African- listed companies is likely to grow next year when the JSE launches its new Africa Board, says Maureen Dlamini, executive head of the Africa Board at the JSE.
The board, due to launch in February, is part of a three-pronged approach the exchange is taking to Africa. It has been set up to attract foreign capital to the African market and will give companies listed on other African bourses the opportunity to dual list on the JSE, which has the most liquid market for equities on the continent.
The new board has been preceded by the Africa series of indices, launched last month, which includes the FTSE/JSE all Africa 40 index and the FTSE/JSE all Africa ex SA 30 index.
The third leg will include linking African exchanges to the JSE, says Dlamini. The Namibian Stock Exchange already uses the JSE's technology, but other exchanges have been slow to follow in using its trading, clearing and settlement systems. This is thought to be because of the costs involved.
Dlamini says the JSE has been speaking to exchanges, issuers and brokers about the new board. Last week, the exchange hosted several companies and brokers for a workshop. While some exchanges have been hesitant, Dlamini says the response has been mostly positive.
"This is going to be a long-term strategy, with lots of communication," she says. "We want markets on the continent to develop. We are not saying delist; maintain your home listing and get a secondary one on the JSE."
Dlamini says when large South African companies such as Anglo American and SABMiller set their sights on the London and New York markets, the local response was initially cautious. However, she says, the detractors were proved wrong as the liquidity of these markets was replicated on the JSE.
Also, the JSE's status as a member of the World Federation of Exchanges (WFE) will benefit companies listed on bourses that are not members, says Dlamini. Many foreign investors are restricted from investing in non-WFE markets.
"The issuers are losing out to big institutional foreign investors who might not be able to trade in their markets," she says.
Listing requirements for companies wanting to dual list on the JSE's Africa Board will be the same for South African companies, Dlamini says.
"We have not watered it down. We want to illustrate that there are quality companies that can comply," she says.
The JSE has already approved Namibian-listed financial services group Trustco as the first company to list on the new board. Other groups are also showing interest.
Dick King, MD of Zambia's Finance Bank, says his group is aiming to list on Zambia's stock market in 2010 and will consider a dual listing on the JSE because of the increased liquidity in the South African market.
"SA has a very mature pension fund and insurance industry, so the investor base is that much broader and there is more international interest too," says King.
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
