A2X wins over Africa's biggest listed company
Secondary listing means the internet behemoth will start trading on new stock exchange on December 27
A2X Markets, one of four new stock exchanges in SA that are taking on the JSE, has received a major boost after winning over Africa’s largest and most frequently traded public company: Naspers.
The JSE-listed internet giant said on Tuesday that it had been approved for a secondary listing on A2X and that its shares would start trading on that exchange from December 27.
Naspers will become the 15th company to have a secondary listing on A2X, which listed the shares of Standard Bank - Africa's largest bank - in November.
The exchange has found favour as it offers free secondary listings to companies and gives their investors more trading options.
A2X CEO Kevin Brady told Business Day that Standard Bank was “a tipping point” for the exchange and Naspers “gets us to critical mass”.
“To have the most liquid and second most liquid stock I think is a great endorsement for the merits of a secondary listing,” Brady said. “We expect the rate of adoption to accelerate in 2019.”
The exchange, which offers lower trading costs than the JSE, also expects to have its licence amended in early 2019 so that it can offer secondary listings to exchange-traded products, he said.
Mergence Investment Managers portfolio manager Peter Takaendesa said securing Naspers is a win for A2X “as they’ve attracted the listing of the most traded stock in SA”.
“Competition for the JSE is clearly increasing, but I think it will take time to make a material impact on its business and will also depend a lot on how they respond to the new entrants,” Takaendesa said.
The JSE's head of capital markets, Donna Nemer, said SA's main bourse was "not complacent" in the face of new competition.
The exchange was investing in technology to "promote good quality liquidity where there's good price discovery, the market functions in an orderly fashion and where traders have confidence that trades will be matched and settled".
"We’re also very committed to reducing the overall cost of trading on the market - we believe we've become very price competitive" Nemer said.
In July, the JSE brought its trading costs closer in line with A2X and other rivals.
The exchange was also “spending a lot of time building relationships with both our issuers and trading firms and investors", Nemer said.
The JSE still handles more than 99% of trading volumes in SA.
Takaendesa said that for Naspers, the secondary listing on A2X is unlikely to meaningfully reduce its discount to net asset value “because it does not address the key drivers of that discount”.
Naspers CEO Bob van Dijk said A2X and other new exchanges are reducing trading costs and increasing market transparency.
“We believe our shareholders will appreciate the added choice of trading venues,” Van Dijk said.
The secondary listing is not aimed at addressing the group’s discount but will provide “additional options and liquidity for our existing shareholders and future shareholders”, a Naspers spokesperson said.
Naspers has said it is working on several “structural options” to improve its valuation relative to its sizeable stake in China’s Tencent. That includes the unbundling of MultiChoice in 2019.