12 December 2012
Black South Africans hold at least 21% of the top 100 companies listed on the Johannesburg Stock Exchange, with 21% of the available shares listed on the JSE still to be assessed, according to research released by the JSE last week.
The 21% includes 9% held directly, mostly through empowerment stakes, and 12% through mandated investments, such as pension funds and unit trusts.
Black, white SA investors at similar level
“This year’s study found a similar participation level among black and white South African investors – 21% and 22% of the Top 100 by value respectively,” JSE chief executive Nicky Newton-King said in a statement, adding that, with 21% of the equity yet to research, the black ownership figures might be understated.
According to Trevor Chandler of consultancy Chandler & Associates, who headed the research team appointed by the JSE, the top 100 listed companies used in the study represent 88% of the total market capitalisation of the exchange and can therefore can be used as a proxy for the total market.
“Last year’s assessment revealed that black South Africans held slightly over 8% of the top 100 companies through direct investment,” the JSE said. “This year, by digging deeper, researchers found that the figure has moved up to 9% through direct investment, and that black South Africans also hold a further 12% of shares in top 100 companies through mandated investments.”
Mandated investors do not select shares themselves, but gain exposure through life offices, pension funds, unit trusts or exchange traded funds.
34% foreign, 21% unmeasured
Chandler, unpacking the research for financial news website Moneyweb, said the overall breakdown of ownership of the JSE’s top 100 companies was 34% foreign ownership, 22% local non-black economic empowerment (BEE), 21% local BEE, 21% local unmeasured, and 2% South African government.
Chandler told Moneyweb that there couldn’t be strict comparisons made with last year’s data, since this year’s research had involved much more data – the researchers had to go through 15-million share ownership records to assess ownership through mandated investments.
This year’s research would, however, provide a base for future measurement.
The research methodology employed in the study was reviewed by two BEE verification agencies, Aqrate and Empowerlogic, as well as one external audit firm, who found it to fairly present the results.
The researchers were cautious about the assumptions that they made during the study. In particular, black economic interest was assumed to be zero when companies did not participate in study, or it could not be proved that pension schemes had black beneficiaries or that black people had life insurance policies or unit trusts.
“As encouraging as the data appears, much still needs to be done to achieve an equitable landscape,” the JSE said.
“To this end, the JSE has for many years run a number of initiatives to foster improved financial literacy and encourage retail South Africans investors to invest on the exchange.”
These included the JSE/Liberty Investment Challenge, an annual trading game that teaches pupils and university student about the workings of the stock market.
The JSE also hosts regular public expos across the country, as well as regular investor showcase events at the exchange that are open to the general public.