MARIAM ISA, Johannesburg | Friday
SOUTH Africa’s stock exchange has unveiled plans for an electronic link to the London Stock Exchange in a bid to boost disappointing trading volumes and stem a recent tide of offshore listings.
The Johannesburg bourse’s Securities Exchange Executive President, Russell Loubser, said the coveted link to the LSE could be in place by the first half of 2001, helping South African companies attract more capital.
”We are looking for a new trading system – the LSE definitely provides a potential solution. The link could be established in the first half of next year,” he said.
Analysts said the step, which follows similar overtures to London by other European bourses and the technology-rich US Nasdaq, would undoubtedly also help the Johannesburg Stock Exchange fight off a bid to set up a rival exchange by a former top executive which the JSE fired last August.
”The first (stock exchange) to initiate these systems would be hard to dethrone… I don’t think our market is liquid enough to justify two exchanges,” BoE Securities director Greg Potter said.
Former JSE executive Mike Bastenie said last month his eChange firm planned a public offer to fund a challenge to the JSE, which is Africa’s biggest and the world’s 18th largest in terms of the market capitalisation of stocks listed on it.
The biggest challenge facing the JSE, which has a market cap of $194bn at present, is to find ways of boosting liquidity sufficiently to reduce consumer trading costs, which are seen as far too expensive for an emerging market.
”This (LSE link) should put positive pressure on the cost structure of the JSE. We as an emerging market can only benefit from the experience of a European market, with the swapping of information and cross-selling of ideas,” Potter said.
With only 40% of its listed companies traded on any given day, the offshore migration of several South African blue-chip companies in recent years hasn’t helped the JSE to attract more business.
Miners Billiton and Anglo American, financial services giant Old Mutual Plc, South African Breweries and most recently IT heavyweight Didata have all migrated to London listings. Others are seen waiting in the wings. – Reuters