Although you never need to look far to find a naysayer about our country, we are still one of the most important emerging markets in the world. However you cut it, we are on the radar of international investors.
Some of them can't find South Africa on a map, but they can find it on a Bloomberg terminal.
The JSE is on a mission to take that story to Southeast Asia, a rapidly growing region that boasts a number of really interesting companies. South African investors are always hungry for offshore exposure that can be achieved through JSE-listed vehicles, as the investment doesn't count towards offshore limits even though the underlying company is offshore.
One of the stories of the past 18 months has been the rocketing share price of Sea Limited, an internet and gaming company headquartered in Singapore. As Jack Ma (and suffering Alibaba shareholders like me) will tell you, being headquartered in Singapore as an internet company is preferable to being in China at the moment. Sea's share price is 7x higher than it was at the start of 2020!
Will we see Southeast Asian companies listed on the JSE? Will investors from that region take positions in our local companies as a useful way to diversify their portfolios? At the rate the JSE is bleeding listings at the moment, CEO Leila Fourie will certainly hope so. Barely a week goes by without another takeover and delisting announcement.
The most contentious potential delisting on the table is Bell Equipment, with activist investors accusing the company at its AGM of everything from asset-stripping through to ripping shareholders off. The anger is around the proposed deal pricing of R10 per share, which is far below the net asset value of the group. Certain investors argue that this is also far below its fair value.
There will be enormous pressure on whoever the independent expert will be for this proposed transaction. We've seen with Adapt IT how critical the role of the independent expert is in protecting minority shareholders.
For all the criticism levelled at the JSE, much of which is warranted based on the loss of listings, there are a number of mechanisms in place to protect minority shareholders. Bell minorities will need to rely heavily on those protections because the intention of the controlling family has certainly been made clear.
Today's content
For those seeking to diversify their investment portfolio, Episode 30 of Magic Markets focuses on the Australian market and especially the profile of small caps in that space. Australia boasts far greater liquidity than South Africa and a broader profile of retail investors, which creates a vibrant small caps market. Mark Tobin of Coffee Microcaps joined the show to discuss this in detail.
In local company news, there were updates from Accelerate and Fortress (both property funds) as well as by Sephaku which sent that cement company's share price into overdrive.
Cuma Dube, who you may now recognise as The ESG Guy, penned another article on the evolution of Value Reporting and how this will help stakeholders hold companies accountable.
Finally, Chris Gilmour keeps you updated on the latest economic and political news around the world.
Good luck for the start of a new week!
The Finance Ghost
