A2X versus JSE trading volumes

The Johannesburg Stock Exchange’s (JSE’s) trading volume and value have remained largely stagnant over the past year.

Experts said this is because many investors are pumping money into international stocks instead of local equities, and A2X starting to win market share from the JSE.

Africa’s largest stock exchange has experienced a spate of delistings over the last decade, contributing to the volume traded on the exchange declining. 

When coupled with a stagnant economy, the JSE is in a difficult position with low to no growth in the short term.

The JSE is trading at a nine-year low, with a market capitalisation of R7.9 billion – a far cry from its high of R17.7 billion in 2018. 

Sasfin chief global equity strategist David Shapiro recently tweeted that the value traded on the exchange was “worryingly low at R10 billion”.

“Without the Naspers and Prosus buybacks, this would be even lower,” he said.

Shapiro said this reflects an economy that has ground to a halt, with South Africans having less money and fewer public companies to invest in. 

Over 20 companies were delisted from the exchange in 2022 alone. The number of companies listed on the bourse has dropped by more than half over the past 30 years to less than 300. 

Patrick Mathidi, head of equity and balanced funds at Aluwani Capital Partners, told the Financial Mail that the JSE’s onerous listing requirements and the perception that the JSE is an expensive market has given birth to competitors like A2X and the Cape Town Stock Exchange.

“Competitor platforms like A2X have been slowly but surely stealing market share away from the JSE,” he said.

Trading platform A2X Markets has shown significant growth over the last three years, with the number of instruments listed on its platform, the volume traded, and the value traded growing exponentially. 

A2X was founded by Sean Melnick, Ashley Mendelowitz and Kevin Brady with the goal of creating a new South African exchange to compete with the existing JSE. 

It aimed to create an exchange that was more efficient than the JSE with lower fees for investors to trade. 

On 6 October 2017, A2X debuted with three listings – African Rainbow Capital, Peregrine Holdings and Coronation Fund Managers – with a combined market cap of R14 billion.

It now has 166 instruments listed on the platform with a market capitalisation of over R9 trillion.

A2X has also managed to attract some of South Africa’s largest companies to its platform, including many JSE Top 40 constituents such as Standard Bank, Sanlam, Discovery, and Prosus. 

It has achieved this growth by offering substantially lower listing fees for companies while attracting investors with much lower brokerage fees to trade on its platform. 

The available liquidity quoted at the National Bid and Offer (NBBO) for the 27 Top 40 index stocks listed on A2X was 4.7x greater on A2X than that found on the JSE.

A2X also offers faster trade execution, so if you were looking to transact at the best possible price, this was available on A2X 77% of the time. 

June 2023 was a record month on A2X in terms of volume and value traded, with R11.27 billion being transacted.

JSE vs A2X

Daily Investor compared the trading volumes and value of the JSE and A2X over the past year to establish whether A2X’s growth is hurting the JSE.

It revealed that A2X is showing exceptional growth in volume and value traded over the last year.

The newcomer is clearly doing something right and is attracting many new listings and investors to the exchange.

However, the value traded in A2X is only around 2% of the value traded in the JSE. Therefore, it does not yet significantly impact the JSE’s trading volumes and value.

JSE Trading Volume

A2X Trading Volume

JSE Trading Value (R’million)

A2X Trading Value (R’million)