JSE on cusp of long awaited listing boom?

The Johannesburg Stock Exchange (JSE) has had an eventful year with multiple new listings and some companies opting for delisting. Among the recent announcements, Sussman & Bell Equipment have decided to delist, marking a shift in the JSE landscape. Valdene Reddy, Director of Capital Markets at the JSE, highlighted the reasons behind these decisions, emphasizing the importance of unlocking shareholder value and restructuring businesses to pursue new directions. Reddy noted that the trend of delistings often occurs in the small and mid-cap space due to trading dynamics and growth opportunities. Companies in this segment sometimes feel they can expand better in the private market, leading to delistings like those of Bell Equipment and Sussman. The JSE has been working on regulatory reforms to enhance market segmentation and attract new listings, addressing concerns about the costs associated with being listed. Reddy mentioned that while direct listing fees are competitive, indirect costs like regulatory oversight and undervaluation of companies' true worth can impact businesses. Amidst the delistings, the small and mid-cap sector has seen increased activity and outperformance in the market this year. Reddy attributed this growth to a shift in investor sentiment and the expectation of lower interest rates, making capital raising more favorable. However, she highlighted the need for a diversified investor base to support sustainable growth in this sector. The JSE has been focusing on initiatives to incentivize companies to stay listed and attract institutional investment, aiming to foster a more robust trading environment. In the bond market, South Africa has seen significant demand, with investors showing renewed interest post the formation of the government of national unity. Foreign investors have been returning to the market, attracted by South Africa's high yields and improved political landscape. Reddy underscored the resilience of South Africa's capital markets despite challenges like credit rating downgrades, emphasizing the country's appeal to global investors. Overall, the JSE is optimistic about the future, with record highs in the equities market and oversubscribed government bond auctions. Reddy expressed confidence in South Africa's stable and liquid markets, poised for continued growth amidst positive global macroeconomic trends. With a focus on stimulating the small and mid-cap sector and attracting foreign investment, the JSE remains committed to fostering a thriving and dynamic market.