Tide is turning against the JSE

Africa’s largest stock exchange, the JSE, has experienced a steady decline in the number of listings on the bourse over the past two decades. 

This has been attributed to weak economic growth, the high costs associated with being listed, and the persistent undervaluation of companies on the exchange. 

The exchange can do very little about the two factors outside of the cost of being listed, with it investing heavily in reducing the burden associated with being on the JSE. 

It has also invested in reducing its reliance on revenue generated from listing fees by expanding the products and services it offers. 

The JSE is also far from the only exchange in the world experiencing a spate of delistings, with even the world’s deepest capital markets in the US seeing a sharp decline in the number of public companies. 

However, the local exchange has struggled to find new listings as a stagnant local economy inhibits the creation of new companies to join the bourse. 

Symmetry chief investment strategist Izak Odendaal explained that this also indicates a shift in how companies raise capital that puts pressure on exchanges to reinvent themselves. 

Odendaal explained that private equity and capital markets have grown significantly in recent decades, providing funding for companies to grow without them having to raise funds on a stock exchange. 

The JSE has been severely impacted, with the number of domestic companies listed on the exchange plunging from nearly 700 two decades ago to less than 200 at the end of 2025. 

In the past year, several major companies said goodbye to the bourse, including Curro, MultiChoice, Barloworld, and Adcock Ingram. 

“This reduces the choice for local investors and also raises broader questions about how the next generation of growing businesses will be funded,” Odendaal said. 

“In particular, the JSE’s once-vibrant junior mining sector has contracted considerably, along with a decline in exploration and development activity.” 

In many ways, the bourse is suffering alongside its international peers, with the cost of compliance discouraging many companies from being publicly listed. 

The scrutiny of being a public company is vital for the proper functioning of capital markets, but, like other forms of funding growth, companies have been able to avoid the close eye of public investors for longer and possibly forever. 

South Africa has its own challenges

While delistings are a global trend, the 139-year-old JSE is also up against factors that are unique to South Africa. 

In particular, the exchange has to combat an economy that has been stagnant for the past 15 years, with an average annual growth rate of just over 1%. 

This translates into funds flowing into local asset managers for their portfolio managers to allocate to the local exchange, which has shown meagre growth over the same period. 

As a result, there is less liquidity and trading on the JSE, discouraging companies from listing or remaining on the exchange. 

More importantly, the lack of economic growth has seen very few large companies being created in South Africa over the past two decades. This results in a poor listing pipeline for the JSE. 

Odendaal pointed to a Reserve Bank report, which flagged weak economic growth and low business confidence as two major reasons why the JSE has been shrinking. 

This was coupled with a study from the University of Cape Town, led by Haroon Lorgat, that showed the JSE has not performed worse than other exchanges in terms of delistings.

Where the exchange has underperformed is in new listings, with it struggling to bring new companies onto the bourse. 

Lorgat’s study pointed to weak economic growth, institutional arrangements, and undervaluation as the three main reasons for this. 

In a sluggish economy, fewer new firms require significant capital to scale, and mature firms do not require funding to expand. 

The institutional arrangements flagged by Lorgat include the regulatory and compliance burden associated with maintaining a new listing. 

He also pointed to changes in the retirement fund landscape, with pension funds being able to invest an increasing share of their assets offshore. 

Odendaal added to this that since the 2008 financial crisis, there has been a decline in research and activity from investment banks in South Africa. 

The JSE is looking to address these issues through work with regulators and other institutions, with Operation Phumelela and the South African Financial Sector Competitiveness Taskforce being created.