CEO Leila Fourie on the JSE's sustainability in uncertain times

From the CEO

The months are racing past and SA will soon say goodbye to summer and prepare for colder weather

From the CEO

The drop in temperature in the southern hemisphere is a stark reminder that this will be our second winter under a worldwide pandemic. As global leaders clamour to vaccinate their populations and return to normal, the SA economy is largely open for business and infection rates no longer threaten the stability of our healthcare system. As terms of trade show further improvement and commodity prices remain strong, we notice a concurrent shift in the country’s growth outlook. The IMF recently upgraded SA’s growth expectations for 2021 from 2.8% to 3.2%, compared with the 7.2% contraction in the prior year. This is a welcome development for investors, businesses and jobseekers alike, whose prospects were severely impacted by the lockdown restrictions. There is no doubt that it will take months if not years to fully appreciate the extent of damage wrought by the pandemic. While the time to normality remains uncertain, we find ourselves at the beginning of a new chapter: one that leads to a prosperous and sustainable future for all.

In his Budget Speech delivered in February, Finance Minister Tito Mboweni pointed out that the path to economic recovery must be driven by implementation of the Economic Reconstruction and Recovery Plan, as described by President Cyril Ramaphosa in his SONA. Under this plan the economy will be stimulated through infrastructure development, transformation in energy generation and policy reforms to attract investment and generate employment. Alongside the powers of state, capital markets are a powerful tool for unlocking investment growth. Throughout the JSE’s 133-year history, the exchange has supported the financial stability and growth of industries and economies. Our wide range of investment classes and reliable infrastructure have the potential to support the country’s growth objectives. We know that in order to participate in the economic recovery we must focus relentlessly on developing relevant products, maintaining our technology and investing in our people.

During the first quarter, we welcomed two issuers on the JSE’s Main Board – Montauk Renewables and Deutsche Konsum Reit-AG – as well as the Sappi Southern Africa convertible bond. We also welcomed the listing of Africa’s first self-labelled sustainability-linked bond by private-healthcare group Netcare, in partnership with Standard Bank, and that of TUHF Ltd, which listed the JSE’s first social bond on the Sustainability Segment. In addition, the JSE also welcomed the Sygnia ESG ETF, which listed in April.

The JSE’s sustainability offering dates back more than a decade and includes indices (in partnership with FTSE) as well as debt products such as green, social and sustainability bonds. Demand for investment opportunities in this space continues to grow and evolve. The JSE is committed to meeting this demand by providing an environment that encourages and accelerates sustainable investment. One of the products we’re currently investigating is a transition bond. This will enable fossil fuel-based companies to use debt financing to transition from fossil-based activities to a greener environment, and in the process ensure there are no stranded assets and job displacements.

The JSE is a catalyst for economic change and continues to explore ways to broaden and attract more quality issuers onto the exchange. In the next six months, we will focus on securing inward listings and progressing our work into private-placement markets. In addition, we are focused on solving delistings, many of which have occurred through schemes of arrangement and corporate actions in small- and mid-cap issuers. Our teams are engaging with market participants to investigate how we can support corporates in this space. This is an important piece of work with valuable input from issuers, brokers and investors.

The JSE’s contribution to SA’s economic growth goes beyond facilitating capital raising. We are a catalyst for fast-tracking growth of new ventures. The AltX, as a capital-raising platform for SMEs, continues to encourage entrepreneurship. Today, the AltX is a springboard for SMEs to graduate onto the Main Board, and has 36 listed companies with a market cap of R28.1 billion. In keeping with our commitment to supporting SMEs, we will soon launch JSE IGNITE, an accelerator programme intended to foster the next generation of corporate SA. JSE IGNITE will support growing companies by equipping them to access funding, grow market share and improve their competitiveness. Each participant will receive customised mentorship and have access to a global network of mentors, including successful CEOs or entrepreneurs. SMEs that complete the programme and wish to raise capital privately can do so through the existing AltX platform or through a regulated private-placement and capital-management platform.

The next chapter of SA’s economic history is already being written, and we have a unique opportunity to set the course ahead. The actions we take today will establish the kind of market we build in the future. I am confident that the JSE’s uncompromising focus on its people, technology and regulation positions us to be the best globally connected platform for a sustainable and prosperous future.

Leila Fourie
Group Chief Executive Officer
April 2021