Equal footing - JSE MAGAZINE

Equal footing

Access to the stock market has never been easier in SA

Equal footing

I think I can safely assume that if you are reading this column, it’s because you’re already invested in equities and recognise that the stock exchange is a sure-fire way to amass wealth, or a degree of wealth anyway. You will also know that the bulk of investing in SA is via institutional rather than retail investing, and that those who do invest for their own account are generally older, wealthier, more educated and, probably, whiter folks. But this is changing.

While it has been changing slowly for years, the lockdown has accelerated the pace. More than ever, South Africans of all ages, races and social statuses are taking more interest in the stock market. They’re interested in savings and financial freedom, and they’re prepared to play the long game. This is reflected in a myriad dedicated media platforms and financial blogs, which all contribute to an ongoing conversation that aims to provide investment information in an accessible way.

Apart from established trading platforms such as Standard Bank and FNB, it is arguably companies such as SatrixNow, etfSA, Coreshares and EasyEquities that have democratised investing. SatrixNow, for instance, has grown its investor base to more than 70 000 direct clients, of whom 50% are under the age of 40, and 27% under 56. There is also a growing interest among women investors – 43% of SatrixNow investors are female.

The 10-year-old EtfSA calls itself ‘the home of ETFs’ and attracts a diverse client base, including many stokvels. And Easy Equities has amassed more than 250 000 clients in six years – most of whom are under 35, which is quite remarkable in a small market such as SA. Easy Equities recently entered into a partnership with Capitec. Gerrie Fourie, CEO of Capitec said that while lower-income people don’t usually invest in equities, the bank has noticed a clear interest from its younger clients.

Underpinning much of this growth is the development of the ETF or passive-investment market, which makes investing simpler and cheaper. The JSE’s Adèle Hattingh, Manager of Business Development and Exchange Traded Products, tells me that the exchange’s ETF market cap has breached the R100 billion mark (including retail and institutional investors).

Supporting this growth is the adoption of tax-free savings accounts, which have risen from 23 854 in October 2017 to 86 006 in September 2020. Of course, in the context of R4 trillion of SA assets under management, R100 billion is tiny. But considering the industry has achieved a CAGR of 20%, it won’t remain tiny for long. There are now 78 different ETFs – ranging from local and global equity and debt, to property and commodities.

The first ESG-focused ETFs listed on the JSE recently, allowing investors to align their responsible investment philosophy with their investment choices. With the wide range of offshore ETFs trading in rands on the JSE, savvier investors are building globally diversified portfolios using JSE-listed securities.

Why is all of this notable or noteworthy? There are two things are worth noting. Firstly, while we still have a long way to go to reduce inequality in this country, the more people who have a stake in the financial well-being of SA Inc the better. And while millions are exposed to the stock market via pension funds, owning individual stocks has a crucial effect on people’s attitudes to politics, financial decisions and cultural identification.

So yes, we’re talking about a small retail investor base, but if equity participation continues to grow across society, the long-term impact on markets, the economy and society could be profound. And secondly, while individual stock holders may never have the influence of institutions, younger investors are not afraid to voice their opinions and could lend vital support to institutional investors who can no longer be relied upon to rubber-stamp board decisions. These are positive changes and we should welcome them.

By Sasha Planting