JSE delistings start to bite


The trend of companies delisting from the JSE, coupled with South Africa’s poor economic performance, has resulted in declining trade volumes on the exchange. This is bad news for investors. 

This was revealed in the JSE Limited’s results for the year ended 31 December 2023. The JSE Limited operates South Africa’s premier stock exchange. 

It produced strong results, with headline earnings per share growing 12.2% and return on equity increasing 19.4%. 

Revenue is up 6% to R2.81 billion, while net finance income grew 66% to R168.89 million, supported by high interest rates.

As part of its strategy to diversify revenue, the JSE increased the proportion of its revenue derived from non-trading activity and achieved non-trading income of R954 million.

This brought the company’s profit for the year to R830.98 million – up 11% from 2022.

However, the results also revealed an underlying issue for the JSE – the declining revenue from equity trading. 

The company’s revenue from equity trading declined from R479 million to R447 million in the 2023 financial year. 

This continued the decline in equity trading revenue from 2020, when the company generated almost R500 million from equity trading. This is shown in the graph below.

This declining revenue is due to the decline in trading volume and value on the JSE over the past few years. 

In 2023, the average daily volume declined to the lowest level since 2019. Trading on the JSE declined to below R20 billion a day. 

At some points in 2023, the average value traded daily went as low as R10 billion. “Without the Naspers and Prosus buybacks, this would be even lower,” Sasfin chief global equity strategist David Shapiro said last year. 

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

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

A decade ago, the JSE had between R25 billion and R35 billion traded daily on the exchange. The daily value traded dropped between R10 billion and R14 billion at periods last year. 

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. 

The JSE earns its revenue from the listing fees of the listed companies and trading fees. The fewer companies on the exchange and the less value traded, the less money the company will earn. 

Head of investments at Morningstar South Africa, Sean Neethling, has also said the delisting trend raises concerns about the future of investing in local equities. 

“The shortage of new listings, the relatively weak performance of local shares and depressed levels of business confidence have further exacerbated fears among market participants,” he said. 

The graphs below show this, comparing the JSE’s performance to its emerging market peers and the average daily traded value and volume.