Right now, 278 companies are listed on the JSE. On requesting this information from the exchange, Currency was quickly informed that those companies carry an impressive market cap of R19.71-trillion.
But what does a mega-market cap matter if listings are dropping like flies? The number of companies on the bourse has nearly halved in the past two decades; a dramatic enough fall for even the Reserve Bank to note in its 2024 Financial Stability Review: “There have been net company delistings every year since 2016.”
As for new listings, well, this year the JSE will welcome just three companies to the exchange. The first is London-based exploration group Shuka Minerals, which makes its debut next week; the others are ASP Isotopes, which Currency wrote about here, and Greencoat Renewables. Not one is an initial public offering (IPO) where the companies raise fresh capital from new investors.
Shuka CEO Richard Lloyd says the company chose to list on the JSE because of the interest of South African investors in its mining projects.
“South African investors understand mining; it’s in their DNA. The company and stock have great promise,” he says. Shuka found it difficult to attract South African investors to its London listing, as many might not have had access to a UK broker.
A paltry three listings hardly makes up for nine years of straight losses, and the decline is an increasing headache for retail investors and the local brokerage community, not to mention the stewards of your pension fund.
“It’s hard to put together a good portfolio because our market is so concentrated,” says Opportune Investments CIO Chris Logan. “South African savers and institutions therefore need to invest offshore, which means there’s less money for our local stocks.”
Money flowing out of the country is but one of the many issues that stems from having a concentrated market. It can lead to increased market volatility if a company has an upset, and heightened exposure to market manipulation. If smaller companies find no traction, this diminishes the vitality of the bourse as a place to raise money and create wealth.
No-one denies this truth or the adverse effects of its reality. So why is the JSE still on a downward spiral if the problem is so obvious, and the repercussions so dire?
No country for small caps
Paul Miller, CEO of AmaranthCX, says the issue is built into the very bones of the market; it’s a systemic problem that cannot simply be undone.
Miller contends that the structure of South Africa’s savings industry – dominated by pension funds, insurance funds and asset managers – has created an environment hostile to smaller companies. Instead of broadening the market, the increasing institutionalisation of savings over the past 30 years has shrunk it.
The larger these institutions have become, the less likely they are to support rights offers or unquoted companies seeking a listing.
And when only a few mega-corporations control the market, they also control how it is structured. “It is largely these institutions that fund the Association for Savings and Investment South Africa, staff all the consultative committees and forums, employ the technical experts, policy specialists and researchers, and lobby for their own interests,” Miller says.
Having a market cap of R1bn makes you small fry on the JSE, and those that control the market reflect that attitude. “Smaller companies generally don’t get a good rating; they don’t get research coverage … they just have no incentive to list,” says Logan.
Adrian Saville, professor of economics, finance and strategy at the Gordon Institute of Business Science, notes that there is actually an abundance of opportunities for small-cap companies to be listed, but because research in South Africa centres on maybe 50 names, many great listing opportunities go unnoticed.
That, and the mountain of regulatory red tape restraining companies that wish to list on the JSE. If you are a small, unnoticed South African company, it is unlikely the high fees and piles of paperwork required to list will entice you.
“I’m very mindful that the JSE is fighting with one hand behind its back with the domestic environment, with the difficulty of doing business, etc. [But] it doesn’t change the fact that I think the JSE could be far more proactive,” Saville says.
It’s telling, perhaps, that JSE CEO Leila Fourie no longer gives interviews on the subject.
The experts Currency spoke to agree on this front: South Africa is one of the worst places to invest from a regulatory standpoint. Logan notes the knock the JSE took in 2022 when PSG delisted due to the burden of regulatory compliance, among other issues.
And while much of this is in the JSE’s hands – there is a consensus that it was slow to take ownership of the problem – many of the most bureaucratic issues surrounding listings come from higher up. Indeed, the South African government is a major player in the market, and one that is horribly fumbling its hand.
The exit is well lit
“I think the elephant in the room is that South Africa is not a great place to do business,” says Logan. “The stock market is symptomatic of economic malaise.”
The Reserve Bank admitted this outright last year, naming the stagnant growth rate as reason enough to alter investing regulations to attract new business.
“From a regulatory perspective, [South Africa] is an incredibly difficult place to do business in. That means that we’ve gotten in our own way. We simply aren’t an attractive destination compared to others,” explains Saville.
Outside of foreign investment, Saville says an economy that has stuttered and stumbled for decades is not the likely birthplace of new companies hungry for capital.
Samuel Mokorosi, the JSE’s head of origination and deals, says this is a perennial issue. “Companies often say they will list ‘when the time is right’. We don’t know when that is or what that means.”
Like all markets, the JSE is often thrown by the news, but the intensity of it locally is extreme. “We have had so many news headlines that have moved the markets,” Mokorosi says. Just in 2025, the JSE has been rocked by US President Donald Trump’s tariffs, uncertainty around the budget, and conflict within the government of national unity.
Mokorosi admits that the JSE cannot get around the macro-socioeconomic environment.
So – in the words of Lenin – what is to be done?
The answer is smaller than you think
For starters, the JSE has already instituted dual-class stocks and reduced free float demands in the hope of keeping companies on the board.
It has also segmented the main board, allowing companies to migrate to the “general segment”, which has a less intense level of regulation.
And there’s the Simplification Project, which aims to make listing requirements plainer, while substantially cutting down on regulations and documents. It’s been submitted to the Financial Sector Conduct Authority, which will hopefully finalise the changes in a month or two says Mokorosi.
But it is “Operation Phumelela” – a group of private sector leaders looking to reinvigorate the market – that may have the most impact.
Stuart Theobald, Kruthum chair and a member of the task force which meets next month, says they will be making recommendations on a wide range of policies that could be changed.
“Perhaps the most important is to think through what would make South Africa more competitive in attracting international financial services business, enabling South Africa to be a financial services hub across Africa,” he says.
“To achieve that we need to change some of the ways exchange control is done, enabling financial services providers to be able to work in multiple currencies.”
Many experts fully support this, saying the enabling of non-ZAR listings, as well as non-ZAR funds management, is vital to attracting foreign investors. This is what other exchanges such as Mauritius already do, and what makes them attractive.
Yet the issue of institutionalised corporations controlling the market remains. The consensus on defeating this is to encourage small players by promoting SMEs and encouraging retail investors as serious players on the market. Mokorosi agrees that “delistings are really a small-cap problem”, and that the JSE also finds retail investors are generally supportive of smaller, newer companies.
On this front, Sweden is a good example of a bourse where small- and mid-cap companies reign supreme. As much as 90% of the Stockholm exchange is made up of companies worth less than $1bn; these are encouraged to remain local for all the benefits they receive (and the low cost of doing business, which is very much not the case in South Africa).
Large investors typically take on the role of cornerstone investors in IPOs, giving confidence to businesses preparing to go public, and to other investors. “Every single successful IPO has involved some level of cornerstone investors,” says John Thiman, partner at law firm White and Case in Stockholm.
According to the Financial Times, Swedish households also hold the highest proportion of their investments in listed companies, and the lowest in bank deposit holdings. This perhaps stems from the introduction of the “Allemansspar” funds in Sweden in 1984, allowing ordinary Swedes to invest in the market, where the returns were completely tax free. In only six years, 1.7-million Swedes had bought into the concept, primarily in domestic small- and mid-cap funds.
There is no shortage of ideas to promote investment in SMEs by everyday investors: introducing mini-IPOs, tokenised equity, self-directed pension funds, and allowing retail buyers to invest in single stocks using their tax-free savings accounts.
Applying these initiatives is the difficult part, and restructuring an entire financial system is no easy feat, especially when its heavyweights benefit from a closed and concentrated market.
It remains to be seen whether Operation Phumelela is the breakthrough that the local market needs. The JSE says it remains “cautiously optimistic”. Caution is the operative word.
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