SA’s stock exchange on a high

4 January 2007

2006 was another record-beating year for South Africa’s JSE, with foreigners buying a record net R73.7-billion worth of local shares, the All Share index rocketing 38% – in the process reaching numerous new all-time highs – and the AltX exchange for smaller companies reaching critical mass just three years after its birth.

Bloomberg reported this week that overseas investment in South African stocks hit a record high for the second year running in 2006, with foreigners investing a net R73.7-billion in the JSE – up by 47% from 2005 – buying R480.8-billion of shares and selling R407.1-billion.

According to Bloomberg, the JSE’s benchmark All Share Index notched up its fourth consecutive annual advance in 2006, gaining 38% – topping the average 29% increase in 25 developing country exchanges tracked by the Morgan Stanley Capital International Emerging Markets Index.

And according to the Financial Mail – which named the JSE its Newsmaker of 2006 – investors in SA’s stock exchange were richly rewarded with an average 30% return on their investments during the year.

The Financial Mail described the JSE’s current bull run as “one of the longest and most robust in recent history,” noting that the bourse had risen by 219%, or 38% a year compounded, since its low point in April 2003.

Delistings ‘won’t spoil the party’
The Financial Mail predicted that a recent wave of delistings from the JSE through private equity buyouts would “not spoil the party – they will surely one day return to the market in better shape”.

JSE CEO Russel Loubser told the Financial Mail that – up to 30 November – new listings had exceeded delistings for the first time in five years in 2006, while Noah Greenhill, marketing and business development general manager at the JSE, told Business Times in December that new listings had added about R80-billion to the JSE’s market capitalisation in 2006.

This would leave the JSE well ahead of the game even if all the private equity deals currently on the table were to go ahead and companies like Edcon, Shoprite, Alexander Forbes and Consol – together worth R55-billion, according to some estimates – were to leave the exchange.

AltX achieves critical mass
At the same time, AltX, the JSE’s alternative exchange for small to medium and growing companies, is gathering momentum after a slow start three years ago.

Greenhill told Business Day recently that the combined market capitalisation of the companies that listed on AltX in 2006 was R5.4-billion – up from R1.9-billion in 2005 – giving the exchange a total capitalisation of R7.4-billion.

2006 was also the year in which the JSE Limited, which runs the 119-year-old bourse, listed on its own main board – and went on to become the year’s best newcomer, more than doubling its share price to R52.50 on 29 December from a closing price on listing of R24.25.

The exchange started 2007 where it left off last year, reaching yet another record high on the first trading day of the new year as the All Share index closed above 25 000 points for the first time – a far cry from the 24 000 level it was at just a month ago. reporter

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