JSE shows solid 2016 Capital Markets activity
Johannesburg, 26 January 2017: Trading on the Johannesburg Stock Exchange for the full 2016 year outstripped 2015’s strong growth, with increases across most markets.
Donna Nemer, Capital Markets Director at the JSE, says, “Last year, volatility in South African markets was driven mostly by factors outside of our borders, from Brexit to the election of US president Donald Trump – a shift from 2015 where much of the volatility was prompted by events at home, ending with the departure from office of then-Finance Minister Nhlanhla Nene. The global political uncertainty and volatility of 2016 boosted the JSE’s market activity overall, with a 17 per cent rise in value traded on the Equity Market and a 21 per cent increase in nominal value traded on the Bond Market, made up of a broad range of local and international individual and institutional investors.”
The JSE recorded 18 new company listings in 2016 (2015: 23): 10 on the Main Board (2015: 13), 7 on the AltX (2015: 8) and one on the Empowerment Segment (2015: 2). The first company to list on the JSE in 2016 was leading global brewer Anheuser-Busch InBev, the JSE’s biggest listed company with a market capitalisation of R2.43 trillion as at 23 January 2017. Including AB InBev, the combined market capitalisation of last year’s new listings was the highest recorded since 2002. In addition, the JSE also recorded 2 new ETFs, 1 ETN and 203 warrants (2015: 2 ETFs; 1 ETN; 264 warrants). Nemer says that there was continued interest in listings vehicles such as SPACs (Special Purpose Acquisition Companies, which are traded shells with a mandate to acquire other assets) and REITs (Real Estate Investment Trusts). There were 716 new bonds issued (2015: 942), with the total nominal value of listed bonds at R27.7 trillion (2015: R23 trillion).
Value traded on the Equities Market rose by 17 per cent to a value of R5.9 trillion in 2016 (2015: R5.01 trillion), with number of trades up by 15 per cent (2015: 33 per cent). Almost a third of trades of the overall market now execute in the JSE’s colocation facility.
The exchange introduced enhanced trade functionality on its Equity Market platform in September 2016 including central order book cross, pegged orders and end-of-day volume auctions. These enhancements were part of a multi-year project which focuses on introducing an integrated solution for the JSE’s trading and clearing services. The project will continue during 2017 and beyond.
The previous record held from 2015 of about R60 billion in value traded in a single day was surpassed three times during 2016. On 29 September, the Equity Market recorded an all-time high in value traded, beating the previous record of 17 March 2016. This was the result of two big deals in the market: the final day of local shares trading of SABMiller ahead of the merger with AB InBev, as well as the disposal by GlaxoSmithKline of the final part of its stake in Aspen Pharmacare. Trade value on that day jumped to R64.32 billion with the previous single-day high in March having been R61.43 billion. It also coincided with an index rebalancing.
Equity Derivatives Market
Value traded on the Equities Derivatives Market rose by 4 per cent in 2016 as compared to 2015, to R6.9 trillion (2015: R6.6 trillion). Contracts traded on the Equities Derivatives Market slipped by 4.6 per cent. Over the past two years, the most liquid Equities Derivatives Market products have been FTS/JSE Top Index Futures and the FTSE/JSE Shareholders Weighted Top 40 Index Futures.
Currency Derivatives Market
Contracts traded on the Currency Derivatives Market climbed 7 per cent to R48.3 million (2015: R45.16 million), while the value traded rose 22 per cent to R734 billion (2015: R604 billion).
Interest Rate Derivatives Market
The Interest Rate Derivatives Market was the JSE’s fastest growing market during 2016, up 66 per cent in volume to R9.4 million (2015: R5.7 million). During September 2016, the JSE traded its first ever on-exchange Interest Rate Swap Futures contract under its licence agreement with the ERIS exchange. The product allows clients to migrate their Over the Counter (OTC) swap positions on-exchange in order to more easily comply with forthcoming BASEL 3 regulatory requirements.
Interest Rate Market
Nominal value traded on the Interest rate Market rose by 22 per cent to a nominal value of R27 trillion (2015: R23 trillion).
Turnover on the Commodity Derivatives Market
Here we saw a decrease in the number of contracts traded as compared to 2015, down 2 per cent to 3.4 million (2015: 3.5 million). However, the value traded was up almost 28 per cent to R957.8 billion (2015: R749.4 billion). During 2016, the JSE implemented the Beef Futures Contract, and finalised the process of moving to a fully electronic silo receipt system.
Looking forward to 2017
“Trade across asset classes has started 2017 strongly though volatility is lower than in much of 2016. Markets are likely to be driven by the impact of Brexit, the economic policies of President Trump, developments in the domestic political sphere and overall investor sentiment towards emerging markets. Investors will also continue to keep a watchful eye on decisions made by ratings agencies. Guided by market needs, the JSE will continue to enhance its listing and trading platforms with work progressing well on ITaC, an electronic trading platform for bonds and new a new listing framework for project bonds, among other initiatives,” says Nemer.
ABOUT THE JSE
The Johannesburg Stock Exchange is based in South Africa where it has operated as a market place for the trading of financial products for 125 years. It connects buyers and sellers in equity, derivative and debt markets. The JSE is one of the top 20 exchanges in the world in terms of market capitalisation and is a member of the World Federation of Exchanges (WFE). The JSE offers a fully electronic, efficient, secure market with world class regulation, trading and clearing systems, settlement assurance and risk management. www.jse.co.za
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