The Johannesburg Stock Exchange (JSE) has released its first findings on the ownership composition of companies listed on the JSE.
According to the study, black South African investors currently own 18% of the available share capital in the top 100 listed companies, which represents 85% of the JSE’s total market cap (R5,7-trillion).
The available capital has been calculated according to requirements in the dti’s code of good practice, which determine BEE ownership levels in companies.
The dti code requires a company’s BEE economic interest to be calculated by taking the total share capital and excluding mandated investments (such as pension funds), investments held by the state, treasury shares (which a company owns in itself) and foreign operations (that is, operations owned by the company outside of South Africa). In addition, cross holdings between entities listed in the top 100 were identified and removed where necessary, to eliminate the capital that is effectively duplicated on the exchange.
If one makes a calculation that is not based on the dti regulatory framework, total black ownership of shares in these 100 companies amounts to 8%.
On track to meet government targets?
The JSE is says it is quite likely that companies on the exchange with meet the 2017 government target for black ownership of the economy — on average, 25%. The JSE is actively encouraging black investors to invest on the exchange. “This study indicates that there is a good basis from which to grow black ownership,” Loubser said.
Figures regarding black ownership may be conservative as the study doesn’t take retail or private investors into account as race segmentation is not a requirement when opening a brokerage account.
Loubser says the JSE will conduct further research with the aim of playing a constructive role in furthering the ownership debate. The focus will be on gaining a better understanding of ownership in mandated investment vehicles and in the retail investor sector. This comes at a critical time in South Africa’s history as the existing BEE codes come up for review.
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