The rise in JSE company delistings has elevated investor concerns

Money, Markets and Masterminds

The South Africa of 1995 was a very different place. The country was basking in the glow of its first democratic elections the year before. We won the Rugby World Cup for the first time and DStv had just launched.

The Johannesburg Stock Exchange also looked vastly different.

At the time, 600 companies were listed on the exchange. Only six of the companies listd in the Top 40 index then – Anglo American, Richemont, Standard Bank, Sasol, Nedcor (now Nedbank), Absa and GoldFields – remain among the 40 largest shares on the bourse today.

And with BHP’s recent bid for Anglo, we don’t know how long, or even if, it will stick around.

The increased number of companies de-listing from the JSE has elevated investor concerns about the outlook for local equities. The shortage of new listings, the relatively weak performance of local shares and depressed levels of business confidence have further fanned fears among market participants.

While the delisting trend is concerning, our discussion today is less about the number of companies vanishing from the equity market and more about the level of market concentration and its impact on investment portfolios.

Citywire South Africa invited Sean Neethling, head of investments at Morningstar Investment Management South Africa into the studio to talk about what this means for money managers.

Neethling joined the business in July 2021 and is responsible for Morningstar South Africa’s domestic and global portfolios. He also oversees the firm’s entire investment capability and strategy.

This is what he had to say.