Why the JSE Is Losing Companies Fast with Giulietta Talevi

追加: 2026-06-03

[00:00:02][music] >> There has been a dramatic turn away from the listings and the energy and all the hype that used to surround the Johannesburg Stock Exchange.

[00:00:28]And it's a place where I used to work. I understand when the stock exchanges of the world used to rule.

[00:00:35]But is it still fit for purpose in the day in the modern days of technology?

[00:00:39]Helping me to understand this better on the bottom line today is none other than Giulietta Talevi from Currency News.

[00:00:47]Giulietta, >> Nice day to have you here.

[00:00:49]>> Yeah, nice to be invited.

[00:00:50]>> Yeah, so you know, I thought that we sort of cover all sorts of business-related stuff on the bottom line.

[00:00:58]Uh Thank you for watching. Don't forget to subscribe. And I was just thinking about this thing cuz I saw recently there's been a couple of delistings on our board. And there's delisting and you mentioned Brikor's delisting. These are hardly the biggest companies in the world, but you know, in the heyday of the stock exchange there were close on a thousand counters and I think now it's >> 278 or or less.

[00:01:23]>> Yeah, 278. I see complaints that Canal Plus is going to be delisting next month or sort of reverse listing and there seems to be no enthusiasm around that.

[00:01:34]>> [clears throat] >> But you know, I I called you up and I thought I'd give you the hospital pass and say ask you what's going on?

[00:01:41]>> on?

[00:01:41]>> Yeah.

[00:01:42]>> I mean, I'm sure you must have been what probably piqued your interest was that open letter from Duarte da Silva in the last couple of days just saying you know, we're at a state of crisis.

[00:01:52]But actually this has been happening for a long time. And and I mean, I wrote a cover story on it more than 3 years ago. Um, the person you should be talking to is a guy called Paul Miller. He um who who done a huge amount of research into this. And he found he was getting really annoyed by the facile reasons for kind of the incredible shrinking JSE. And so I mean, what is not a facile reason is that's our economy has been so moribund for such a long time for you know, for 15 years at least we've had close to no economic growth.

[00:02:26]That is a huge contributing factor cuz there's no animal spirits in the economy. So, how can you expect animal spirits on the stock exchange?

[00:02:33]>> Yeah.

[00:02:34]>> Um and if there's no animal spirits, share prices, you know, people don't put money into stocks and uh it's harder for companies to raise capital. They feel that their shares are undervalued, which is why most of the delistings have happened in the small and medium-cap companies because they just kind of you know, what was the point of being listed, right? Their share prices were undervalued. They could be better the use of the capital to buy their own stock back or ultimately delist themselves. And I think Balwin is a classic example. It came to the market at about 11 rand and delisting at about four bucks, you know?

[00:03:08]So But there's a few reasons and and and and Mr. De Silva talks about um the decision to open up um invest uh the ability for uh pension funds to invest 45% of their assets offshore. And he's actually wanting to bring that cap back to 30%.

[00:03:28]But I don't know if that is actually the real problem. And Paul Miller and that's the name people must go and look him up.

[00:03:35]He's got lots of articles that he wrote for us for Daily Maverick and I interviewed him.

[00:03:40]There's a there's a few things involved here. Um so it's quite complex. So, I don't know if you want me to go through all the things.

[00:03:46]>> Let's Let's Yeah.

[00:03:47]>> Okay. Okay. Well, we >> forget Paul Miller.

[00:03:50]>> Yeah, you got me. It's a poor substitute, let tell you.

[00:03:53]>> Yeah, it sounds like a terrible oversight on my behalf, but uh >> Yeah, okay. So, the economy is one thing I think, you know, critically. Um the other is the whole structure of the markets. Um the taxation of investments. So, now the collective investment schemes industry, which is, you know, your unit trusts, um they lobbied when CGT, capital gains tax, was introduced in 2001 to be exempt from from capital gains tax when they were, you know, buying and selling stocks within their trusts. And and and rightly so. So, in fact, if you as a unit trust holder, when you sell your unit trust, um or your unit, um that is when your CGT event is triggered. But if you're a trader in shares, you are subject to CGT all the time and also tax on your income. If you mean if you're buying and selling shares regularly enough, that's whatever you make is is counted as income. So, you're getting taxed twice.

[00:04:55]And it's much more punitive if you're a private investor actively managing a stock portfolio than if you're invested via collective investment scheme. Okay?

[00:05:05]So, they have a tax benefit that you as a private trader of shares don't enjoy.

[00:05:10]That's a big thing. I personally I think. I mean, Paul had a bunch of reasons that and some of them are a little bit esoteric maybe. So, I think that's a a big issue. The other is the concentration of the asset management industry.

[00:05:22]Um and what you've had is sort of big players.

[00:05:27]In Paul's view, you have 10 big players, like Allan Gray and Coronation and Sanlam and 91, that actually suck up about 90% of money that's allocated towards, you know, unit trusts or money market funds or pension funds.

[00:05:44]And because these guys have become so big and they have so many assets under management, uh it becomes more difficult for them to justify investing in smaller shares. So, they will put money into the liquid end of the market, which is the bigger cap stocks, the top 100 shares.

[00:06:00]So, that means that capital is sort of starved for the smaller companies. And also, if you know, if if you have to do a lot of research on smaller companies, but if the thing doesn't move the needle for you at all because you've got 500 billion rand assets under management and you're talking about a company that has a market cap of a billion rand, you're not going to spend time on the research, right?

[00:06:26]And so, that's it's it's sort of sucked capital away from the smaller end of the JSE, which is where you want new listings to to to to take place. And um and yes, I understand that there's also an argument that private equity um that that companies would rather get money from private equity investors than go to a stock exchange. And this is to some extent what has happened in places like the London Stock Exchange. We're not the only stock exchange that's had issues with delistings and the shrinking markets, but there are others that confound that, like the Australian Stock Exchange, which is booming. You know, it's got more than 2,000 listings.

[00:07:06]Okay, the the Swedish Stock Exchange.

[00:07:09]These are These are very vibrant places to raise capital.

[00:07:14]And I think the other thing about that is that you have a culture of investing in shares directly in Sweden, in Australia.

[00:07:24]People are much more sort of proactive.

[00:07:26]Um and I think in South Africa, a lot of people are very, very conservative. So, they'll put money into money market funds or into a pension fund or a unit trust, but they've got no kind of desire to trade the market.

[00:07:41]So, I mean, it's it's a it's a raft of of factors, but it is worrying, you know.

[00:07:46]>> Yeah.

[00:07:47]And to to compound the problem, the JSE is itself listed, which which was a interesting idea, and which means they need to make money, and uh they've done their classic really wonderful thing that only monopolies can try and do, only them and Eskom, where business is bad, so you increase your prices.

[00:08:07]>> Yeah. Yeah. I mean, I I you obviously have a fairly jaundiced view of the JSE, and I think more than a few people do. Um I don't think the JSE has been has necessarily totally covered itself in glory. I think uh but I think they had a lot of things stacked against them. Um and they have been trying. They really have tried, you know, they've they've tried to they set up the AltX. I mean, remember that, and then, you know, companies would list on AltX and then graduate to the main board. They have this simplification project at the moment, which is to simplify listing rules [snorts] and reporting so that it's not so onerous and so time-consuming. So, they are trying.

[00:08:47]>> It's only 20 years too late, but they're trying.

[00:08:49]>> [laughter] >> Yeah. I mean, Paul's Paul's arguments um going back to Paul, so using his name here, hopefully he doesn't mind me doing so, was that the JSE didn't use its convening power to push for uh you know, greater um vigor um on the exchange with national treasury, you know, introducing tax breaks. He he his argument was that they didn't they really didn't do enough to kind of go out and sell this you know, the JSE and sell you know, the story of of listing in shares. And and you know, the company that did that, of course, was EasyEquities. I mean, and actually EasyEquities example shows how in fact, people do want to list on the But, do want to invest and trade on the JSE. You know, they've got 1.2 million active users or just above.

[00:09:42]They they've grown that in 10 years.

[00:09:44]That's a huge huge thing where they've done so much to encourage people to invest on the JSE. Um So, it it is possible. And so, you you know, I think that the JSE deserves some criticism.

[00:09:59]>> Um >> Yeah. I suppose uh Juliet, it speaks to South Africa's bigger bigger problem.

[00:10:05]Uh where, you know, and I I talk about this because I come out of an entrepreneurial home uh where there was never any doubt that one would start one's own business. And it it it's all mindset thing. South Africa has never understood small business.

[00:10:22]Uh and we've gone from one nationalist government that didn't understand it to another nationalist government that doesn't understand it. And it's just I suppose the Johannesburg Stock Exchange just a reflection on that, isn't it?

[00:10:35]>> Yeah, maybe to some extent. Um you know, raising Well, exactly. Going going back to the point of raising capital for for venture you know, for um exploration companies, mining exploration companies. Okay, I mean, this is maybe a twin part problem in that you had a terrible legislative environment for the mining sector for the you know, for the last 20 >> Mhm.

[00:10:57]>> 4 years, 25 years. Um so, and and if you don't have things like a mining cadastre which shows where all the properties are listed and you have Gwede Mantashe as your mining minister, nothing is going to happen in mining exploration. But, that is But, okay. So, so let's that's the government's shooting itself or us in both feet um in that sense.

[00:11:20]But, it is still very difficult um for exploration companies to attract institutional capital. So, you're right.

[00:11:28]Institutional investors are very leery >> Mhm.

[00:11:31]>> of smaller companies cuz can blow up.

[00:11:34]>> Yeah.

[00:11:34]>> And they frequently do. Um but if you But but you've got to get capital to invest in these businesses and and maybe the problem is that there's so much sort of shame attached to a business imploding and whereas America's you know >> Yeah.

[00:11:53]>> quite good about that. Um you know, you can declare section chapter 11 bankruptcy or you move on, you know, here there's a huge stigma attached to kind of failing as a business.

[00:12:04]>> Yeah.

[00:12:04]>> Um and and capital's expensive. Um yeah.

[00:12:07]>> It points to the two big government interventions which to my mind, you know, mind-numbingly mind-blowingly stupid. One is uh somebody thought it was a good idea to end the one good bit of legislation we had which was close corporations so they took them away which allowed businesses some advantage as a small business and now you're either a sole proprietorship or a company. So in other words, it's just as difficult to run a small company as a big company.

[00:12:40]It's crazy.

[00:12:42]And then of course, you mentioned chapter 11 and uh we thought it was a great idea to start business rescue as opposed to something as simple as chapter 11.

[00:12:51]And now you've got uh business rescue which you've got to be very rich to be very poor. It's like your only option.

[00:12:59]It's the most ludicrous bit of legislation ever. More Yeah, you can see you can get me going on >> Yeah, clearly. Yeah, I mean look, it hasn't I mean if you know, Murray and Roberts uh you know, going these companies that have gone through business rescue procedures. Basil Read has been in business rescue for God, I don't know how long.

[00:13:16]>> Yeah, I think I think one day we should do an article cuz it'd be quite short like perhaps when you're on holiday saying these are the companies that have been rescued under business rescue cuz I don't think there's one that's come out of business rescue.

[00:13:29]>> Well, maybe companies that we know of on the JSE. Um look, you know, I I'm no expert in you know, the the CC and we started a business. Currency News was our own business and I can tell you that there's I mean, where are the tax breaks? There's no tax breaks and and dealing with um SARS. I mean, sorry, this is a complete segue from talking about the shrinking JSE, but uh you know, I had to pay our PAYE you know, PAYE over to SARS on the on the day and you're managing cash flow as a business, right? And and you I think, okay, I'm going to do it on the last possible day that I can do it.

[00:14:04]But then you do it at after 3:00 in the afternoon, so it doesn't record on somebody's system and immediately immediately you get slapped with a a penalty of, you know, in our case it was a few thousand rand, which is money that we couldn't afford. And there was no sort of first time offender uh pardon.

[00:14:21]>> Yeah.

[00:14:21]>> I mean, so stuff like that, yeah, it's it's it's really uh running your own business is um it's hard work.

[00:14:28]>> And uh the the Johannesburg Stock Exchange proves that it's not just the government that doesn't understand business or small business or encouraging small business.

[00:14:38]To be fair to the JSE, uh you know, um for the they've never been able to get small cap uh things going and South Africa's not exactly the it's not exactly Silicon Valley, is it?

[00:14:50]>> Um yeah, I don't know if I I agree with you totally there, Mike. I think they have tried. Maybe they haven't tried hard enough, um but they have tried and um you know, the I suppose the other thing is there are the the the obligations that you have as a listed company are necessary because you don't want you don't want a situation where companies are coming to the exchange and then they're a pump and dump scheme, they take people's money and then, you know, explode spectacularly or ride off into the sunset with people's cash, you know?

[00:15:23]So, you've got to have I mean, this is why you have listing requirements and you got to have rules around this. Um and and as as I mentioned, you know, the the JSE has this has this simplification project with regards to the listing requirements to make things a bit more streamlined for companies and for smaller businesses.

[00:15:40]Um So, I mean, it's it's a tension and it's it's a it's not an This is not an easy fix. None of this is an easy fix. Um uh for the exchange because you can't just relax listing's requirements completely because then maybe it is a free-for-all and um you know, investors benefit from greater rigor when it comes to how a company is managed.

[00:16:06]>> Mhm.

[00:16:06]>> Uh or they should benefit. Put it that way.

[00:16:09]>> I suppose you could say that investors could also benefit from a wild west type of stock exchange because you may get some great winners in in amongst the you know, some of the the bad ones and >> Which I suppose is what you had um maybe 40 years ago. Um you know, but there were also there was a lot of kind of um there were a lot of misdeeds, I think, taking place on the exchange. A lot of, you know, front running, insider trading, lots of nonsense.

[00:16:38]>> Now, let's talk about just in closing the role of technology because there is obviously and you know, we're going to we're going to go off script. So, all those papers are useless now. Um yeah, I wonder to what extent um a stock exchange is still necessary.

[00:16:57]You know, if one thinks of a of a you know, you can you can try and explain to your children what a vegetable market was because, you know, all the farmers had to go somewhere and someone had to meet them somewhere. So, it's quite easy to understand. Now, they no longer exist. Why does one need a central place for investors to find sellers When we've got, you know, when we are connected to blockchain, we've got just the internet of things as it is.

[00:17:25]You know, the trading is done online. Does it need to be centralized, I suppose?

[00:17:31]>> Wait. Um >> For regulatory purposes only, I presume.

[00:17:35]>> And for maybe safety purposes. You mean you need a clearing house, right? Isn't that the mechanism of of an exchange?

[00:17:42]You have people buying shares, selling shares.

[00:17:45]Um the trades have got to match and clear.

[00:17:48]Um deepest [clears throat] Now now I Now I'm completely out of my depth. Um you know, this is where you want to talk to It's old old maybe not old, but like a David Shapiro. You want to talk to the stock brokers. But I suppose it's a good question, you know, if you have technology that enables sort of crypto trading at any time of the day, anywhere in the world, why can't that apply to listed companies? Um yeah, maybe they'll be exchanges will be an anachronism in 20 years time.

[00:18:20]>> Yeah. Well, Julietta, it looks like they may have become an anachronism long before 20 years from now.

[00:18:28]And it may be those very regulations that keep them in business at the moment. So, it's very interesting to watch, but thank you for uh for coming in and having a chat.

[00:18:37]>> Pleasure.

[00:18:37]>> Lots of fun. Give us a thought as to what you think about stock exchanges. Do we still need them?

[00:18:44]Do they still serve a purpose uh or has their time come and gone? Let me know what you think.

[00:18:51]Thank you to Julietta for coming through, and thank you to you for watching. Please, we're growing this channel. Subscribe. Let us know what you think and who you would like to see on the show.

[00:19:01]Uh that's all for me on the bottom line, and uh we'll see you again soon.

[00:19:23]>> Mhm.