This is what is behind the JSE's dwindling trading volumes

In recent times, the Johannesburg Stock Exchange (JSE) has been experiencing dwindling trading volumes, causing concern among investors and market participants. However, today's trading activity painted a different picture, with a significant boost in trading volumes reaching close to 20 billion for the day. This surge in activity marks a departure from the norm, where average daily volumes have been in the range of 12 to 13 billion. Notably, Naspers, which typically dominates trading volumes, only accounted for about 10 percent of the overall activity, signaling a broad-based increase in trading across various sectors. Companies like British American Tobacco, Richemont, Bid Corporation, and FirstRand were among the top performers in terms of trading volumes, with foreign-held shares like FirstRand seeing heightened activity. Despite the positive uptick in trading volumes today, concerns linger regarding the long-term sustainability of this trend. The narrowing market and lack of new major listings have contributed to the decline in trading volumes on the JSE. The sluggish economy, coupled with policy uncertainties surrounding land ownership and mining regulations, have also dampened investor interest in the local market. Portfolio Manager at Sasfin Securities, Nesan Nair, highlighted the need for a revival in economic activity to attract foreign investors and drive trading volumes higher. The JSE's dependence on trading volumes for revenue makes the current scenario a pressing issue for stakeholders. The recent spike in trading volumes, fueled partly by external factors like the crisis in Turkey, has brought some relief to the market. The weakening of the Turkish lira prompted investors to seek refuge in 'safe-haven' stocks, leading to increased trading in companies like British American Tobacco, Richemont, and Anglo-American. However, not all companies experienced positive trading activity, as seen in the case of Sappi, whose share price plummeted following disappointing performance in the third quarter. Declining profits and rising costs were key factors contributing to investor unease, highlighting the importance of sustained growth for shareholders. While external events like the Turkey crisis may provide temporary boosts to trading volumes, the underlying challenges facing the JSE remain a critical concern for the market moving forward.