Our opinion on the current state of JSE

The Johannesburg Stock Exchange (JSE), listed on its own platform, serves as a securities exchange facilitating the trading of shares, bonds, and derivatives. With approximately 320 listed and quoted shares, it stands as the largest stock exchange in Africa by market capitalization and ranks 17th globally. Historically, the JSE has been consistently profitable, largely due to its former monopoly on equity trading in South Africa.

However, in 2017, several competing stock exchanges were registered and licensed to trade equities in South Africa, with the A2X emerging as the most notable competitor. A2X has attracted a growing number of listings, including major players like Naspers and Standard Bank, and claims to offer trading at significantly lower costs compared to the JSE. Responding to this competition, the JSE has reduced its costs, yet still maintains a dominant market share of 99.7% in South Africa.

Benefitting from increased trading volumes amid the volatility of COVID-19, the JSE remains a relatively stable investment, well-capitalized and trading at a P/E ratio of around 11.23. Although significant competition from A2X may take time to materialize, it is steadily gaining ground.

In its financial results for the year ending 31st December 2023, the JSE reported a 12.2% increase in headline earnings per share (HEPS) and a return on equity (ROE) of 19.4%, with revenue up by 6.2%. The growth in revenue was supported by diversified business segments and asset classes, including Information Services and JSE Investor Services (JIS).

Despite concerns over a steady downward trend in its share price and a reduction in the size of the JSE due to delistings surpassing new listings, the share has been moving sideways for the past three years. It remains a relatively secure blue-chip investment, though impacted by COVID-19 and local economic mismanagement.