In October 2022, six months ago, the American stock market was in bear market territories. It was so bad that we all thought we would be in a recession since the performance of the stock market was so bad. But the bad performance of the American stock market did not affect the entire world as we would have thought. As a matter of fact, foreign stock exchanges performed rather well, especially the South African stock market.
The South African stock market is known as the Johannesburg Stock Exchange (JSE). It is the largest stock exchange in Africa and one of the top 20 exchanges in the world by market capitalization. The JSE provides a platform for investors to buy and sell shares in companies listed on the exchange. The JSE has a diverse range of sectors represented in its listings, including mining, financial services, consumer goods, and technology. Some of the largest companies listed on the JSE include Naspers, Sasol, Anglo-American Platinum, and Standard Bank Group.
Source: JSE, Financial Times
In early October 2022, the South African stock market was trading at around 66,000 points. In early January 2023, the South African stock market increased drastically to the 80,000 points threshold. This was a 121% increase in shareholder value. Some of the major gainers from this surge in stocks price include MultiChoice Group, Ltd; Anheuser-Busch InBev SA; Growthpoint Properties, Ltd; AngloGold Ashanti, Ltd; and Bid Corporation, Ltd.; while some of the major losers from these increases include Anglo-American Platinum, Ltd; Northam Platinum Holdings, Ltd; Impala platinum Holdings; and Sibanye Stillwater, Ltd. These companies had the highest percentage loss.
The JSE is considered the best in Africa for a couple of reasons:
1. Market Size: The JSE is the largest stock exchange in Africa by market capitalization, with a market capitalization of over $2 trillion. This means that it has a larger pool of investors and listed companies, making it more attractive to investors. 2. Liquidity: The JSE is known for its high liquidity, which means that there is a high volume of trading activity and it is easy to buy and sell shares. This is important for investors who want to enter or exit positions quickly. 3. Regulations: The JSE is regulated by the Financial Sector Conduct Authority (FSCA), which is responsible for ensuring that the market operates fairly and transparently. This helps to build investor confidence in the market. 4. Sophisticated Financial Infrastructure: South Africa has a sophisticated financial infrastructure with well-established banks, financial institutions, and investment firms. This infrastructure supports the functioning of the stock market, making it more attractive to investors. 5. Diverse Range of Companies: The JSE has a diverse range of companies listed, including mining, financial services, consumer goods, and technology. This means that investors have a wide range of investment opportunities and can diversify their portfolios.
The World Bank reckons that investors looking for opportunities in Africa can expect “some of the highest investment returns in the world.” And given Africa’s growth prospects, the challenge for investors is to identify the best avenue for entering the market. Indeed, stock exchanges hold some advantages over, say private equity in raising investment capital. Companies can raise large sums of money to expand operations without getting expensive bank loans, listed firms are required to publish regular reports, and stock exchanges give individuals a chance to invest directly in large corporations. The South African stock market is undeniably the most developed of all, but the other African stock markets such as the Nigeria stock market, are also on the rise in terms of financial regulation and structure. The African continent is becoming a very profitable place for expanding capital markets.