9 July 2013

South Africa: Wider Market Participation Sought for Johannesburg

Johannesburg — The Johannesburg Stock Exchange (JSE) is working with banks to educate the majority of South Africans about the benefits of buying and selling shares of companies listed on the exchange, according to the head of investor relations at JSE Ltd.

Only about 10 per cent of activity on Africa's largest stock exchange was accounted for by individual investors, Michelle Joubert, the head of investor relations at the company that runs the stock exchange, told visiting African journalists.

Direct participation by individuals on the exchange was low because of a culture of low savings among South Africans. Contributing to the low participation on the JSE by individuals was also the fact that the apartheid government had made it difficult for the black majority to participate in the stock market, Ms Joubert said.

The stock exchange had been running a campaign in collaboration with the country's commercial banks to educate South Africans about the advantages of participating in the stock market, she said.

Ms Joubert said the stock exchange was concerned about the low levels of direct participation by individual investors and would also like to see higher levels of investment through the stock market by the black majority.

Retail investment on the market still predominantly involved white investors, "which obviously is a situation which we don't want to continue," she said.

Meanwhile, the tepid global economy, which had impacted on South Africa's economic activity, had deterred companies from listing on the stock exchange.

"People trade less during a recession, hence listings were low during the recession," Ms Joubert said.

She added that the JSE was scheduled to host a meeting of heads of stock exchanges on the African continent in September to share information and discuss ways of increasing cooperation. The meeting, aimed at building capacity in African financial markets, would be the second of its kind following an "extremely successful" seminar last year.

The JSE was not looking to set up a pan-African exchange but wanted to boost the growth of exchanges across the continent, Ms Joubert said.

Puso Kedidimetse, a journalist from Botswana, took part in a Thomson Reuters Foundation/Norad financial reporting workshop in Johannesburg in June 2013.

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