From the CEO

As I write this, the challenges of the political and economic contagion that rapidly replaced the global COVID-19 crisis are being felt around the world

From the CEO

We now live in an environment grasped by inflationary pressures, and gripped by rising interest rates as countries and markets do what they can to stave off a possible recession. SA is not alone; the S&P recorded its worst half-year results this year since 1970. The emerging markets are always vulnerable at times like these, yet SA, because of the diversity and scope of its markets, is performing well on a number of critical metrics with the cyclicality of the different sectors allowing certain ones to offset the performance of others – to the benefit of investors. On a relative basis though, while SA’s inflation rate came in slightly higher than our range at 6.5%, it is lower than the US for the first time in decades. SA isn’t dependent on gas like Europe, so the long-term inflationary outlook is less severe. We can further mitigate the risks and pressures that markets in the northern hemisphere face, thanks to the country being a net food exporter with an internal support of coal for its energy needs.

Much has been said, and rightly so, about the ongoing electricity situation with Eskom. SA was plunged into its worst load-shedding cycle in the first half of the year since the utility began tactically throttling back supply in 2007. It’s important, however, not to be distracted by short-term shocks to the economy precipitated by a labour dispute – which have since been resolved – from the long-term solutions that are under way, driven by profound changes in how the country manages electricity. There is the planned unbundling of the SOE, the issuing of 100 MW allocations to IPPs and the signing of 18 leases of unused Eskom land to IPPs, which will all have a significant impact on how the national grid is serviced and, particularly, how Eskom progressively manages its current capacity constraints.

For all the apparent challenges, SA remains an attractive investment destination. We’ve seen a rebalancing of the index with Russian outflows. Traders have been noticeably choosing SA over other BRICS nations due to our geographic remoteness from the ongoing war, our high commodity pipeline and our improved fiscal position. It is significant that SA is actually the only emerging market in a better fiscal position now than it was during the pandemic.

The innovation that we have begun this year as we look to expand the JSE’s offerings beyond the traditional scope of our business continues to bear fruit. We are preparing to welcome our second cohort to the JSE Entrepreneur Acceleration Programme and we are expanding our partnership with the Western Cape government for the nurturing of SMEs.

JSE Private Placements (JPP) is the second leg of the JSE SME Solutions, a trifecta of initiatives we created to holistically stimulate and foster the SME sector. JPP seamlessly connects private companies and issuers directly to investors to privately raise debt or equity. It has attracted more than R10 billion in committed investor capital and five issuers to its platform. In July, more than R490 million was raised for equity and almost R540 million for debt. In the process, funding was created for the establishment of the 50-bed hospital in Musina, as well as the necessary funds for a waste-treatment plant; three schools; and a lab-grown diamond facility. All of these have the potential to improve the lives of those who live in the communities these projects serve, while creating sustainable jobs that didn’t exist beforehand. Significantly, all these projects should provide a return for the investors in the process, precisely what we hoped to achieve when we set up JPP.

The incubator of incubators is the final leg of our three-pronged approach; fast-tracking qualifying companies to access funding, while working with government to remove barriers to doing business and investment incentives. We hope these initiatives will help to radically transform the economy; spurring innovation, rewarding entrepreneurship, providing jobs and creating real public-private partnerships that can fundamentally improve the lives of millions of South Africans.

The JSE also recently published guidelines on sustainability and climate disclosure, incorporating the recently released draft IFRS Sustainability Disclosure Standards; the GRI Sustainability Reporting Standards; the TCFD recommendations; and the Draft European Sustainability Reporting Standards. The guidelines are intended to help listed companies successfully navigate the regulations internationally, as well as to ensure that SA’s specific sustainability challenges are understood. The publication of these notes improves the ability of listed entities to properly report across the various pillars of the environment, social and governance. They are also a critical tool for investors to be able to make informed choices about where they are placing their funds. The upside of both is the improved sustainability of our companies and their enhanced accountability and ethical leadership.

As we approach our 135th anniversary, it’s important to reflect on how we got here and – perhaps more importantly – where we go from here. Our past has been built on decades of institutional integrity and probity. Our future will demand the same, as well as being even more attuned to the needs of our members, our country and the international community with the necessary agility to respond and to adapt. We are continuously innovating while relentlessly perfecting that which we have done so well for so long. We are building back better – together. Thank you for your support.

Dr Leila Fourie
Group Chief Executive Officer