Jse mining indaba ~ investment discovery forum

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Jse mining indaba ~ investment discovery forum

  1. 1. JSE, a mine of investment opportunities?
  2. 2. Agenda  Overview of the JSE  More our SA capital and financial market  Focus on Africa  Regulatory changes  Market performance  Listing requirements  Conclusion
  3. 3. Overview of the JSE: Where we are
  4. 4. South Africa – relative to other BRICS 70 Gini Index South Africa Brazil 60 50 China 40 Russia 30 India 20 10 0 0 5 10 15 20 25 30 Unemployment rate % Source: World Bank 9000 GDP $ billion China 8000 7000 6000 5000 4000 3000 Brazil Russia 2000 1000 India Hong Kong South Africa 0 0 500 1000 1500 2000 2500 Market cap $billion 3000 3500 4000 www.jse.co.za
  5. 5. The Johannesburg Stock Exchange Licensed under the Securities Services Act 2004 Member of the World Federation of Exchanges since 1964 Two boards for listing – Main Board and AltX 1st In Regulation Securities Exchanges 4th Largest Bond Market by value traded in 2012 19th Largest Exchange in the World by Market Cap
  6. 6. The JSE in a global context Overview of the JSE The World Economic Forum’s annual World Competitiveness report showcases the world-leading position of the JSE as a financial market and South Africa as capital market destination 1 1 Efficacy of corporate boards 1 1 1 Financial market legal rights development Regulation of securities exchanges Protection of minority shareholders Strength of auditing and reporting standards 2 Financing through local Equity markets 2 Availability of financial services 3 Soundness of Bank
  7. 7. World Economic Forum, Global Competitiveness Index 2013 - 2014 Australia Canada China South Africa United Kingdom Strength of auditing and reporting standards 14 9 80 1 16 36 Protection of minority shareholder's interests 24 16 75 1 15 27 Financing through the local equity market 8 15 38 2 12 6 Soundness of banks 9 1 72 3 106 58 Regulation of securities exchanges 11 16 63 1 24 30 Legal rights index 1 42 65 1 1 12 United States Total Countries 148
  8. 8. BRICS opportunities MOU signed by participating BRICS exchanges • Resulted in a joint initiative to expose investors to the BRICS economies, through crosslisting products - BRICSmart • The Initial, 1st phase offering, now gives investors access to derivatives on Brazil’s IBOVESPA, Russia’s MICEX Index, India’s SENSEX Index, China’s Hang Seng and Hang Seng China Enterprises Indices and South Africa’s FTSE/JSE Top40 Index • Apart from cross-listing products, other opportunities will be explored to promote greater development and understanding amongst the respective markets
  9. 9. FTSE/JSE Index performance OVERVIEW Indices performance (Jan 2009 - 30 Jan 2014) 140% 120% FTSE/JSE All Share Index: major stock market index which tracks the performance of 160 companies listed on the Johannesburg Stock Exchange in South Africa. Anglo American gained 2.79% to R252,34. Sasol closed at a record high of R557,97. Kumba Iron Ore leapt 3.62% to R458 and ArcelorMittal jumped 4.61% to R40.82. Top 40: up 107% Mid cap: up 113% Small cap: up 113% Fledgling: up 90% (40687.2 points) (57146.8 points) (48789.17 points) (6373.8 points) 80% 60% % 23 Jan: The JSE All Share Index closed at a record high for the third time‚ underpinned by a rise in platinum‚ resources and gold mining stocks. 100% 40% 20% 0% Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 -20% -40% Top 40 Mid Cap Small Cap Fledgling Jan-14
  10. 10. JSE Broader Africa Focus
  11. 11. JSE on the continent December 2013 100.0% 80.0% 60.0% Liquidity 40.0% Kenya 20.0% 0.0% Uganda 0 -20.0% -40.0% Nigeria BSE SEM 50 Namibia JSE EGX 100 150 200 250 Ghana -60.0% -80.0% -100.0% # of listed companies 300 350 400 450
  12. 12. Fundamental changes in the regulation creates opportunities Medium term budget policy October 2011 “The National Treasury has announced that local investors will now be able to trade in foreign domiciled companies listed on the JSE, boosting the status of South Africa’s bourse as a springboard for foreign companies to expand into Africa” Benefits for investors • SA investors are not limited to invest in only South African companies but also foreign companies listed on the JSE • The JSE’s regulatory standards and governance requirements my provide comfort to investors
  13. 13. Fundamental changes in the regulation creates opportunities Budget Speech Review 2013 National Treasury announced their support for South African companies that want to expand into the rest of Africa and offshore. Each Johannesburg Stock Exchange listed entity will be entitled to establish one subsidiary to hold African and offshore operations (HoldCo), which will not be subject to foreign exchange restrictions. This will incentivise companies to manage their African and offshore operations from South Africa, maximising the benefits to South Africa’s economy. Transfers from the parent company to HoldCo will be allowed up to R750 million per hear. Additional amounts may be considered on application to the Reserve Bank. Benefits to South African and African companies • Listing allows for index inclusion • Capital raised on the JSE is freely transferable out of South Africa • South Africa holds a significant weighting in emerging markets and attracts a substantial amount of foreign investment • Diversity shareholder base and get access to new sizeable pools of equity • Listed JSE shares may be used as transaction currency for future acquisitions • South Africa has a large domestic investor pool (top 15 investors have FUM of more than USD500bn) • Numerous listed peers, which will promote research coverage and investor interest • JSE is a major destination for global emerging market funds • JSE likely to provide greater liquidity South Africa is well banked, with a broader range of broker coverage by both international banks and local operations
  14. 14. Benefits of a Dual Listing Capital Access Valuation Deep pools of capital Appropriate for your company and its’ prospects Company profile Acquisition Scrip Raised with increased analysis For company transactions Benchmarking Investor Base With comparable international companies Diversified and incudes all assets of South African institutions
  15. 15. Dual listings on the JSE OVERVIEW Mining dual listings Other Dual listed companies contribute 83% of the overall basic resources market capitalisation 6 Africa 4 USA 30 – 40% on foreign trade on the JSE, SA investors looking at diversifying outside of South Africa 7 TSX 6 ASX 11 Raise money in South Africa for Africa . Europe ex LSE 9 LSE 17 0 5 10 15 20
  16. 16. Glencore XstrataCase Study Price Performance Share price performance since listing 5600 5500 5400 5300 5200 5100 5000 4900 4800 4700 Listing 13 Nov 2013 31 Dec 2013 Share Price – cps 5387 5481 Market Cap R714.5bn R727.8bn High/Low since admission 5481/4999  Listed in 2013, closing price at R53.87 and market cap of R714.5billion  Glencore is the third- largest company on the JSE after BAT (1.1 trillion) and SAB Miller (887 billion)  The biggest company in the mining sector by market cap www.jse.co.za
  17. 17. Total capital raised on the JSE ( Equity & Debt ) OVERVIEW ZAR-_ Billions 386 companies listed of which 67 are basic resources (Mining and Industrial metals & mining) Capital raised 400.00 350.00 93 300.00 250.00 36 of 67 companies are dual listed 200.00 78 150.00 Basic resources companies contribute 23% (R2.4 trillion) of the overall JSE market cap of R10.6 trillion. In 2013, 19% of the trade on our debt market was conducted by foreign investors 261.5 88 100.00 50.00 - 81 107 125.2 77 14.5 2008 39.0 2009 64.2 2010 Corporate Bonds 83.8 2011 Equity capital 2012 2013
  18. 18. Total capital raised by mining companies TOTAL Capital raised by mining companies 40 35 Billions Debt capital raised down 11.4% year-on-year. As at the end of October 2013, the nominal value of the bond of the mining sector was R4.55 billion (0.3% of total). This amount comprised of 11 listings by 4 issuers 37.0 34.2 30 28.4 25 21.5 20 18.4 15 12.2 10 3.9 5 - 2.9 0.0 0.2 0.1 0.0 2008 2009 2010 2011 Debt Equity 2012 2013
  19. 19. Volume, # of deals and Value traded Value traded- strong liquidity for mining issuers 12 10 10 8 8 1,000 788 800 700 6 765 799 865 745 600 6 913 879 900 ZAR Billions 12 Total deals in Millions Volume in Billions Volume & Deals for mining companies 562 500 400 4 4 300 2 2 273 200 100 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 Volume Deals 2005 2006 2007 2008 2009 2010 2011 2012 2013
  20. 20. South Africa – Assets Under Management CIS, LISP, LTI Lisp Total Sum of Assets, R 81 865 348 233 Collective investments total, R1,199,807,578,842 Long Term Insurance, R1,738,281,842,769 + $4bn (R40bn) Hedge Fund industry Source: ASISA
  21. 21. Listing Requirements
  22. 22. Exchange control and tax implications? Initial Public Offerings (IPO) - Application for Excon approval - Foreign business requires ( R) VOSTRO account - Capital deployed within 30 days Tax Treatment o Foreign domiciled company's tax residence status is not affected, provided that it has no business operations or activities within South Africa. o Non-resident shareholder holding of JSE listed shares will not incur South African capital gains tax (CGT) unless: • 80% of the market value of the shares at the time of disposal is attributable (directly or indirectly) to immovable property and; • Non-resident shareholder holds at least 20% of the equity shares of the company. • Double taxation agreements are applicable where relevant.
  23. 23. Conclusion: JSE, a mine of investment opportunities? • Investment case for South Africa? – Gateway for liquid investment in the continent. – Well regulated market, SARB is independent and monetary policy is clear and straightforward. – No restrictions on foreign investors • Mining part of South African DNA.
  24. 24. Thank you

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