14 October 2011
South Africa is open for foreign investment and ready to act as a gateway to the rest of the African continent, Finance Minister Pravin Gordhan said at the World Federation of Exchanges’ general assembly and annual meeting in Johannesburg on Wednesday.
Gordan said South Africa welcomed foreign investment, while the country would also offer its services as a gateway to Africa.
Gordhan called on the World Federation of Exchanges (WFE) – an association of 52 regulated exchanges around the world – to offer its expertise to countries that were still developing their stock exchanges.
“Would you consider another chamber for countries still developing their stock exchanges to learn from you?” Gordhan asked delegates at the meeting. This, he said, would help small economies to one day become crucial economies.
Emerging markets ‘innocent bystanders’
Turning his attention to the current global economic environment, the minister described emerging markets as “innocent bystanders”, adding that the sovereign crisis in Europe had prompted extreme levels of volatility.
“The volatility on stock exchanges tends to aggravate the crisis,” he said, noting that this was more so for developing nations.
Stock exchanges were key to promoting growth by unlocking capital, Gordhan said, also crediting stock exchanges for giving ordinary people the opportunity to participate in them as well as allowing people to save.
“In South Africa, research showed that in 2010, 17.6% of market value was held by pension funds … Pensioners rely on the JSE for a safe retirement. Stock exchanges have an important role to play in creating growth and helping people save.”
Draft Financial Markets Bill
On the derivatives that bore the liability for the 2008 financial meltdown, South Africa’s draft Financial Markets Bill 2011 took steps towards ensuring that derivative transactions were regulated by seeing to it that the transactions were recorded.
Approved in July by Cabinet, the draft law’s primary objectives are to strengthen the legislative framework for a sound and well-regulated financial markets industry, to provide financial market stability to industry participants, and to protect consumers of securities services.
“One of the challenges is to work towards a new financial system where it is the servant of the economy, not the master,” Gordhan said.
The WFE meeting ends on Sunday.