Picture: JSE
Picture: JSE

Shares in the JSE fell 9.57% to R133.92 on Monday, its biggest one-day drop since listing in 2006, after SA’s main bourse said earnings could decline by more than a third in the six months to end-June because of muted trading activity.

The JSE, which generates revenue from transaction fees, has been contending with weak appetite by foreign investors for SA stocks amid the country’s economic malaise, and new competition including low-cost exchange A2X Markets.

In the year to date — to Friday, June 21 — the value of reported equity trades on the JSE plunged 39% compared with the same period in 2018, the JSE’s weekly market statistics publication shows.

Foreigners have been net sellers of JSE-listed equities so far this year, the data shows.

The company’s share price reached a high of more than R200 in May 2018.

The exchange said on Monday headline earnings per share for the interim period would probably fall between 25% and 35%.

Earnings had been dented by “a decline in the key activity drivers in the main asset classes traded on the JSE and, in particular, lower value traded in the equities market”.

The equities market had seen more than R28bn in net foreign sales as well as “muted local investor activity” in the first half of the financial year. This resulted in lower revenues, particularly relative to the high base of a year before.

The JSE said its numbers had also been affected by the addition of new staff, and a new tiered-billing model for equities trading, which reduced trading costs for clients.

Further, earnings in the prior period had been boosted by an income tax credit of R31m.

“The JSE’s cash and capital remain healthy and position the JSE well to execute on its various strategic initiatives,” the exchange said.

“Although it is disappointing to reflect these expected results, the JSE revenue performance largely reflects the reality of the difficult economic environment in SA, which, in turn, impacts investor appetite.”

But the group was “committed to resourcing our business and making the investments we need to ensure the long-term sustainability of the JSE”, which remained “a critical component of the South African economic ecosystem”.