It is very concerning that politicians use the race card to win votes and popularity in South Africa. It is criminal that a president should do so. Craig Atherfold (H+K Strategies South Africa) proves, on behalf of the JSE (Johannesburg Stock Exchange) that Jacob Zuma made a BIG lie during his SONA speech when he claimed that only 3% of the JSE is owned by black people [you should also read Andrew Donaldson’s refutation, ‘The Dog Ate My Signal Jammer’):
As at end 2013, black South Africans hold 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 (mostly through individuals contributing to pension funds, unit trusts and life policies).
White South Africans hold about 22% of the Top 100 companies while foreign investors hold 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 Black South Africans.
These are the key findings of independent research assessing share economic interest as at 31 December 2013, put together for the JSE by 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% as at end-2012 and 23% a year later. “The shareholder analysis over this period demonstrates that economic transformation is taking place.” says 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 estimates that broken down by industry, Financials contribute the most towards 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.
Direct investments accounted for about 24% of total South African investment into the Top 100. Of the total 24%, less than a third is owned by individuals with portfolios (or 7% of the total equity capital) made up by black (less than 1% of the Top 100 by value) and white (about 6%).
“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,” says 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.”
The researchers point out that the value of foreign shareholding over the period increased from 34% in 2011 to 39% in 2013.
NB: As yet un-researched: 16% (by value) of the Top 100 companies: The research process is extremely work-intensive and time consuming, including the need to go through thousands of ownership records from Strate and participating schemes which are cross tabulated with other documents to obtain certainty about race profiles of investors. Having started in 2010 by assessing only direct holdings, the researchers have consistently increased the percentage of the Top 100 being assessed each year. A further 16% of the Top 100 shares are still to be analysed; the researchers point out that this might include pockets of black economic interest.