Black South Africans hold 23% of JSE top 100
As at end 2013, black South Africans held at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange. The shares held by black investors includes 10% held directly [largely through BEE schemes] and 13% through mandated investment. White South Africans held about 22% of the Top 100 companies while foreign investors held about 39%.
A further 16% of the Top 100 shares which are still to be analysed are likely to include a mix of shareholder demographics, including more Black South Africans. These are the key findings of independent research assessing shareholding in listed companies as at 31 December 2013, put together for the JSE by Black Economic Empowerment (BEE) advisory group Alternative Prosperity using data from the JSE, Strate and a large number of investors. In the previous report published by the researchers, they estimated that black economic interest on the exchange was 21% as at end-2011. This grew to 22% at end-2012 and 23% a year later. “The shareholder analysis over this period demonstrates that economic transformation is taking place.” said JSE CEO Nicky Newton-King. The biggest proportion of investment funds of both black and white South Africans is held through mandated investments. Alternative Prosperity estimates that at end-2013 mandated investments accounted for about 37% of total investment into the JSE’s Top 100 companies.
Retirement funds are the biggest South African investors on the stock market, the largest of these being the Government Employee Pension Scheme (GEPF) whose members include most civil servants other than those working for municipalities. Chairman of Alternative Prosperity and leader of the research team Trevor Chandler estimated that broken down by industry, Financials contributed the most to BEE economic interest values. The researchers observe that BEE performance tends to do well where industries have significant reliance on sales to government, where BEE plays a role in the granting of business licenses and where sectors have made commitments in terms of sector codes. “Whilst the level of economic interest by black South Africans is linked to our country’s history, the low level of direct participation on the exchange by all South Africans is also linked to generally low financial literacy and related savings,” said Newton-King.
“South Africans are often tentative about investing directly on the market. The financial services industry is working to improve financial literacy; for example the JSE runs directed capital educational programs in schools and universities and to the general public. We are also gearing up to promote the tax free savings accounts for South Africans recently launched by National Treasury, due to kick off in 2015. We believe this will be an important route to encourage more individual saving and investment through the stock market,” she added.