Nowhere is radical change more desperately needed in SA than in the capital markets. The model that has dominated for more than 60 years is stagnant, with no broadening of the capital markets. It is also hopelessly skewed against the private investor. The equity market is too concentrated and the debt market remains inaccessible and opaque. Despite there being nearly 1,300 collective investment schemes as well as many broker-managed discretionary portfolios, allocations are nearly all aligned to a limited number of old economy securities. Passive investment products such as index trackers simply compound the concentration. Due to regulation and the structural funding imbalance between the capital market and the collective investment schemes industry, asset managers are in effect restricted to investing in securities with large market capitalisation. It is therefore difficult for innovative (new economy) small and medium-sized companies to raise capital from asset managers. They need...

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