South Africa’s Johannesburg Stock Exchange (JSE) is to benefit from a policy change by South Africa’s National Treasury that allows foreign domiciled companies to be included in domestic indices.
The rule change should make it easier for dual-listed companies to raise capital in South Africa, as they will classified on the JSE as domestic assets. Inward listed shares have traditionally attracted low volumes due to the limits imposed on foreign exchange allowances.
If a company is already listed elsewhere, a secondary listing can be fast-tracked as the JSE recognises exchanges that are members of the World Federation of Exchanges.
“Now the investment decision is based on merit rather than the shackles of regulatory issues,” said Franco Lorenzani, CEO, Macquarie First South Securities South Africa. “There’s demand for commodities particularly out of Asia and other markets and this change was imperative to encourage investment in the region.”
The JSE has been seeking to boost its global profile in recent months. The exchange established a point-of-presence at a UK data centre with low-latency service provider Fixnetix in December, facilitating access to its bourse for non-domestic participants. The JSE is also planning to upgrade to Millennium Exchange, the technology platform used by the London Stock Exchange, later this year.
“This augurs well for the JSE attracting further resource listings and we look forward to meeting the international mining companies with assets in Africa during the mining indaba,” said John Burke, head of issuer regulation, JSE. “On account of the policy change, both retail and institutional investors will have more flexibility and this could increase liquidity in dual listed shares.”