JSE sees slump in equity trades in first half of 2019
Competition and cautious foreign investors weigh on main the stock exchange
The JSE says the value of equity trades on SA’s main stock exchange slumped nearly a fifth in the first half of 2019.
This comes as foreign investors shy away from SA stocks amid a downturn in the domestic economy, and as the JSE contends with new competition in the form of low-cost exchange A2X Markets and other newcomers.
The value of reported share trades on the JSE fell 39.5%, or R86.2bn, in the six months to end-June, the exchange’s market statistics show. The number of reported trades halved.
Together with trades executed via the exchange’s central order book — which facilitates automated and auction trades — total trading values fell 17.3%.
Meanwhile, net sales of JSE-listed shares by foreign investors amounted to R29.8bn. This compares to net inflows of R17.5bn in the first six months of 2018.
But foreigners were net buyers of local bonds in the first half of 2019, after being net sellers a year before. Net purchases of domestic bonds by foreigners totalled R19.2bn — nearly two-thirds the value of equity outflows.
The JSE warned in June that its earnings — which are largely derived from transaction fees — could decline by more than a third in the six months to end-June because of muted trading activity.
The exchange said headline earnings per share for the interim period would probably fall between 25% and 35%.
Earnings have 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.
“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,” the bourse said.
The value of trades on A2X rose to R726.7m in the first half of 2019, from just R6.1m a year before, CEO Kevin Brady told Business Day on Wednesday. More than 20 JSE-listed companies are now also listed on A2X.
Correction: July 3 2019
An earlier version of this article said the value of reported equity sales fell nearly 40% in the first half. While factually correct, this was misleading as the value of total trades fell only 17.3%. Reported trades refers only to those that are negotiated outside of the exchange's trading system.