JSE releases second study on Black ownership on the
October 05, 2011
JOHANNESBURG, 4TH October 2011 -Black South Africans hold at
least 17% of the Top 100 Companies listed on the Johannesburg Stock Exchange,
with 32% of the shares of these companies still to assess, says Trevor Chandler
of Chandler & Associates, who headed the research team appointed by the JSE.
The 17% includes 8% held directly, mostly through empowerment stakes,
and 9% through mandated investments, such as pension funds and unit trusts. The
figure is understated as not all shares have been analysed. The research, done
in phases on behalf of the JSE, aims to demonstrate what black South Africans
own in the country’s largest listed corporations. Part of the remaining 32% is
likely to be owned by black South Africans.
“In a country undergoing
economic transformation, it is important to have empirical data about black
investment on the JSE,” says Russell Loubser, CEO of the JSE. “The exchange has
the records needed for meaningful research, as we carry out, clear and settle
trades. We believe that this research gives South Africa a basis from which
black ownership can be measured in future. With 32% of the equity yet to
research, we believe that the ownership figure is actually understated. We also
anticipate that the black economic interest will climb in future.”
is much debate about black ownership on the JSE. The purpose of the study was to
present the facts in an impartial manner. The top 100 companies listed on the
JSE used in the study represent 85% of the total market capitalisation of the
exchange and therefore can be used as a proxy for the total market.
year’s assessment revealed that black South Africans held 8% of the Top 100
companies through direct investment. This year, researchers found that the 8%
through direct investment remains constant and that black South Africans also
hold a further 9% of shares in Top 100 companies through mandated investments.
Mandated investors do not select shares themselves, but gain exposure through
life offices, pension funds, unit trusts or exchange traded funds.
research is being done in phases due to the extremely time-consuming nature of
the analysis. This year, the researchers had to wade through ten million share
ownership records to assess half the shares owned through mandated investments.
(The other half still needs be researched, meaning that the total number of
shares held by black investors through mandated funds is likely to increase in
future studies.) Verification agency AQRate confirmed the findings by checking
the data against pension fund statistics, company annual reports and other
records to ensure accuracy.
Given that the Department of Trade and
Industry (dti) is central in the country’s formulation of BEE codes, the
researchers applied the dti’s suggested methodology. Using the calculation
method suggested in the dti BEE codes, certain categories of ownership are
excluded as the investors are deemed to be neither black nor white. The dti
excludes shares held by the State and Treasury shares (2% of all shares in the
Top 100 companies in 2011). In addition cross holdings between listed entities
(11%) were excluded to avoid double counting. Dti also suggests subtracting
shares to the value of foreign operations held by groups with offshore assets
This year, therefore, only 60% of shares can be acquired by black
or white South Africans. This boosts the percentage held by black South
Africans. According to the dti method, black South Africans hold 17% of 60%, or
28% of all available shares.
“More black South Africans own shares
through mandated investments than through BEE deals,” says Chandler. “By number,
middle class black South Africans are the main beneficiaries of mandated
investment. This is achieved with no gearing – pension funds, life insurance
policies and collective investment schemes do not carry debt.”
says Chris van Wyk of AQRate, means that the market complies with generic codes
2017 targets, in aggregate. “The BEE Codes require 25% black ownership by 2017.
Currently black people own at least 28% (using the dti calculation). Moreover,
with 32% of total market yet to be analysed, the actual black ownership figure
is likely to be higher.”
The researchers were cautious about the
assumptions that they made during the study. In particular, black economic
interest was assumed to be zero when:
• Companies did not participate in
• Researchers could not prove that pension schemes had black
• Researchers could not prove that black people had life
insurance policies or unit trusts.
As encouraging as the data appears, much
still needs to be done to achieve an equitable landscape. To this end the JSE
has for many years run a number of initiatives to foster improved financial
literacy and encourage retail South Africans investors to invest on the
• The JSE/Liberty Investment Challenge is an annual trading
game which the two groups have run for 37 years to educate learners about the
workings of the stock market. Teams of learners or university students are given
an imaginary sum of R1 000 000 to invest in JSE-listed shares. Their performance
is then tracked and measured against other teams taking part in the contest.
• The JSE reaches out to ordinary South Africans about how to begin
investing, and has travelled the country with expos in major cities.
JSE’s education department is working alongside government to improve financial
and investing knowledge amongst learners in Gauteng, Kwazulu Natal and Eastern
Cape schools. Aimed at Grade 9 and 10 pupils, the initiative has an emphasis on
practical financial knowledge including budgeting, saving, managing a bank
account and investment principles. Training for teachers and course material
including detailed lesson plans are provided by the JSE.
• The JSE also
hosts regular investor showcase events at the exchange that are open to the
Issued on behalf of:
Tel: 011 520 7001
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Victoria Williams Renata Da Silva
Tel: 011 463 2198 or Tel:
011 463 2198
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As South Africa’s only full service securities
exchange, the JSE connects buyers and sellers in four different financial
markets, namely equities, equity derivatives, commodity derivatives and interest
rate products. The JSE Ltd offers the investor a truly first world trading
environment, with world class technology, surveillance and settlement in an
emerging market context. It is amongst the top 20 largest equities exchanges in
terms of market capitalisation in the world. For further information, please
Trevor Chandler & Associates (TC&A)
TC&A is a network
of professional consultants that specialise in BBBEE and sustainability.
TC&A’s founder Trevor Chandler is currently a member of the Financial Sector
Charter Council Board and also led a financial sector task group that
contributed to the development of the generic DTI Codes BEE ownership
provisions. TC&A holds a minority interest in Alternative Prosperity which
is a leading provider of solutions in the Socio Economic development sphere. For
further information, please visit www.tca-empowerment.co.za.
About AQRate Verification Services
AQRate is one of
the foremost verification agencies in the country, having extensive experience
in the verification of listed companies and in particular the ownership
structures of these entities. AQRate has a proud history in the industry, having
been one of the founding members of the Association of BEE Verification Agencies
(ABVA), and comprising two of the first group of eleven accredited agencies in
February 2009. Currently it is the only verification agency in the country that
is accredited nationally with separate accredited offices in Gauteng, Western
Cape and Kwa-zulu Natal. AQRate is regularly consulted by other verification
agencies and consultants on complex ownership structures. Its CEO, Chris van
Wyk, is currently the chairperson of ABVA and also in charge of the technical
portfolio of ABVA.
Glossary of terms
Trade and Industry (DTI) Codes of Good Practice: The BEE Codes of Good Practice
are gazetted under section 9(1) of the broad based black empowerment act and are
applied in the development, evaluation and monitoring of BEE charters,
initiatives, transactions and other BEE implementation mechanisms. The Codes
contains detailed guidance on how to measure black economic interest. While this
code has generic application to all sectors of the economy, the JSE takes no
view as to what code or measurement mechanism should be applied to specific
Mandated investments: Any investments made by
or through any third party regulated by legislation on behalf of the actual
owner of the funds pursuant of a mandate given by the owner to the third party.
Mandated investments would include domestic ownership by pension funds,
collective investment schemes, insurance company policyholder funds, medical
schemes and other forms of mandated investment as defined in the dti Code of
Practice. Example: GEPF Pension fund
operations: Those parts of the business of a company that are not
conducted in South Africa. Example: the Australian operations of BHP Billiton.
Investments held by state: Investments that are
beneficially owned by the government.
Shares that a company holds in itself.