Capital Markets
From The Report: South Africa 2014
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The trillion-dollar market capitalisation of the Johannesburg Stock Exchange (JSE) makes the country’s bourse the 19th-largest exchange worldwide. South Africa has one of the highest equity capitalisation-to-GDP ratios globally, a unique phenomenon by international standards. The country’s capital markets have performed exceedingly well in recent years, in contrast to broader macroeconomic turbulence. Economic growth for 2013, for example, was 1.9%, compared to an equity market that grew by 21.4%. Despite the challenging economic outlook, the JSE is expected to continue to perform well. Equity markets should receive a boost through infrastructure improvements and market conditions like private equity exits, and private equity is set to see strong growth as institutions have not reached their full investment potential. On the bonds and financial derivatives side, the array of products is set to expand, with Islamic debt having made its debut.

This chapter contains interviews with Nonkululeko Nyembezi-Heita, Chairman, Johannesburg Stock Exchange; Stephen van Coller, Chief Executive of Corporate and Investment Banking, Barclays Africa; and Elias Masilela, Former CEO, Public Investment Corporation.

Articles from this Chapter

Overview

Market growth continues despite economic turbulence
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With an economy worth roughly one-third of a trillion dollars, South Africa only accounts for 0.5% of global GDP. Nevertheless, the trillion-dollar market capitalisation of the Johannesburg Stock Exchange (JSE) makes the country’s bourse the 19th-largest exchange worldwide. South Africa has one of the highest equity capitalisation-to-GDP ratios globally, a unique phenomenon by international standards. The country’s capital markets have performed exceedingly well in recent years, in contrast…

Interview

OBG talks to Nonkululeko Nyembezi-Heita, Chairman, Johannesburg Stock Exchange (JSE)
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Interview:Nonkululeko Nyembezi-Heita To what extent do swings in global investment appetite affect the South African market? NONKULULEKO NYEMBEZI-HEITA: The high volume of foreign portfolio investment in the JSE is a reflection of the exchange’s attractiveness and an indication that it is not really an emerging market bourse but rather an international one. For the past few years we have been ranked the best-regulated securities exchange globally by the World Economic Forum and are also…

Interview

OBG talks to Stephen van Coller, Chief Executive of Corporate and Investment Banking, Barclays Africa
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Interview:Stephen van Coller What are some evident trends in terms of investor appetite for specific asset classes? STEPHEN VAN COLLER: We are seeing a lot of investor appetite for credit in the bond market. Money is relatively cheap now so people are not just depositing in banks. Instead, they are looking for more in terms of yield pickup and, as such, are finding general corporate credit to be increasingly attractive. After the global financial crisis, equity is not seen as such a sure…

Analysis

Still number one: The exchange innovates with regulation and offerings
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The Johannesburg Stock Exchange (JSE) retained its ranking as the best-governed bourse globally, a position it has held for four years running, according to the World Economic Forum’s “Global Competitiveness Report” for 2013-14. Balancing effective regulation with an enabling environment for new products has been key to the JSE’s success. Sound, Strong & Supportive The JSE is South Africa’s only licensed securities exchange. It is also a self-regulatory body, meaning that it regulates…

Interview

OBG talks to Elias Masilela, Former CEO, Public Investment Corporation
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Interview:Elias Masilela To what extent are domestic asset managers ensuring local investments contribute to inclusive growth? ELIAS MASILELA: To date, asset managers in South Africa have participated directly and indirectly in funding public infrastructure development projects. While the general mandate of asset managers is to achieve high returns on investments, it can be beneficial to target projects that contribute to economic growth and development. With a raft of large-scale public…

Analysis

AngloGold Ashanti: Mining
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The Company AngloGold Ashanti is the world’s third-largest gold producer by volume, with annual production of around 4m oz and a strong presence in exploration, mining and marketing. The company is headquartered in Johannesburg and has 21 operations in 10 countries. Its major development projects are Tropicana in Australia, Kibali in the Democratic Republic of the Congo (DRC) and La Colosa in Colombia. The company’s extensive brownfield, greenfield and marine exploration programmes extend to 12 countries in both established and new gold-producing regions through managed and non-managed joint ventures, strategic alliances and wholly owned…

Analysis

Financial services
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The Company FirstRand is the third-largest South African bank by balance sheet size, holding total assets of R895bn ($84.8bn) as of December 31, 2013. It operates three primary brands: First National Bank, with a retail and commercial focus; Rand Merchant Bank, which competes in the corporate and investment banking markets; and Wesbank, providing vehicle and asset finance products. FirstRand is listed on the Johannesburg Stock Exchange and has a diverse institutional shareholder base. The largest shareholder, with a 33.9% stake, is RMB Holdings. Performance FirstRand has a June year-end date and reported IFRS pre-tax profits of R12.42bn…

Analysis

Kumba: Mining
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The Company Kumba is a listed iron ore mining company and 70% subsidiary of global diversified miner Anglo American, benefitting from group procurement and mine optimisation strategies. Kumba was formed in a 2001 demerger from South African integrated steel company Iscor and a subsequent demerger of coal mining operations in 2006 to form a separately listed company, Exxaro. Exxaro simultaneously became the 20% black economic empowerment equity shareholder of Kumba’s subsidiary, Sishen Iron Ore. Currently, Kumba’s principal operations are Sishen mine (37m tonnes per annum), Thabazimbi (1m tonnes per annum, approaching the end of its life in…

Analysis

MTN: Telecommunications
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The Company MTN is a multi-national telecommunications company headquartered in South Africa, with operations in 22 countries across Africa and the Middle East. MTN’s offerings include voice services through 2G or GSM networks and data services through 3G networks. Incorporated in 1994 under the name M-Cell, the company was awarded the second national licence in South Africa, commencing commercial operations in June 1994. Having already established itself in South Africa, M-Cell expanded its operations by obtaining licences in Swaziland, Uganda and Rwanda in 1998. In 2000 M-Cell commenced operations in Cameroon, following the acquisition…

Analysis

Sasol: Oil & gas
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The Company Sasol is an integrated oil and gas company with substantial chemical interests based in South Africa, where it enjoys a leading 35% share of the liquid fuels market. Its core business is the production of liquid fuels and chemicals from coal using Fischer Tropsch technology. The company has also developed natural gas reserves in Mozambique in partnership with the local government. The gas is mainly sent via a pipeline to South Africa, where it is fed into Sasol’s synthetic fuels and chemicals process, in addition to being sold into the local industrial market. A major business development for Sasol was its two, $1bn shale gas joint…

Analysis

Retail
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The Company Woolworths Holding is an investment holding company, listed on the Johannesburg Stock Exchange, and operating through two subsidiaries, Woolworths (proprietary) and Country Road, as well as joint venture Woolworths Financial Services. Woolworths is a chain of retail stores in South Africa and certain countries in Africa and the Middle East that offers a range of clothing, food and general merchandise, mostly under its own brand. Woolworths contributes 79% to group turnover and 74% of the pre-tax profits, comprising the Woolworths Clothing and General Merchandise and Food divisions. Food sales make up approximately 49% of revenues…