JSE delisting trend continues

Ascendis Health announced that it is considering joining a string of other JSE-listed companies in delisting from the bourse.

On Wednesday, the company informed shareholders that it has “initiated a process to investigate and progress a potential delisting of Ascendis from the JSE”.

It described this move as the next step in its strategy to unlock value and return capital to Ascendis shareholders. 

While no offers have been made, the company has entered into discussions with a consortium led by ACN Capital IHC (Pty) Limited, owned and controlled by Carl Neethling.

“The Company is of the opinion that delisting is a key element of the strategy of the Company that will allow for a more expeditious return of capital to Ascendis shareholders,” the company said.

The company advised shareholders to exercise caution when dealing in the company’s securities until a further announcement is made.

Over 20 companies 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. 

In 2022, AmaranthCX rang the warning bells for a string of delistings from the JSE.

The company said South Africa had 332 listed companies across the JSE and the three challenger stock exchanges at the beginning of 2022.

AmaranthCX director Paul Miller said that during the first half of 2022, 18 companies delisted from the JSE and other exchanges.

Fourteen more companies are in the formal process of delisting or are subject to corporate action likely to result in their delisting.

There are also 16 companies suspended from trading or which have not been able to publish their financial results.

AmaranthCX’s research suggested that at least 32 companies, potentially far more, will delist from South African stock exchanges this year. 

JSE competitor A2X markets also said earlier this year that South Africa’s main stock exchange would probably continue haemorrhaging listings over the next year as companies grapple with onerous regulatory and funding conditions, making raising capital through initial public offerings less attractive.

“The macro-economic environment is not particularly conducive to raising capital in South Africa,” A2X CEO Kevin Brady said. 

“The regulatory requirements to have a primary listing are quite burdensome from cost, to time, to compliance departments, particularly for the smaller companies, which are the ones we are seeing delisting.”

According to Brady, small companies are also struggling to keep up with the regulations imposed on listed entities.

“We have swung the pendulum too far on regulation and investor protection, and we haven’t spent enough time on how do we grow this market,” he said.

The JSE is also suffering from a continued trend of declining trade volumes. 

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 noted in a social media post 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. 

Founder of Herenya Capital Advisors Petri Redelinghuys said the volume and value traded on the JSE have fallen consistently over the last decade.