The JSE was less affected by the global economic downturn last year than other key markets, and the market has benefited from rising interest among retail investors.
JSE CEO Dr Leila Fourie said in an interview as part of the JSE SA Trade Connect Conference held in Cape Town yesterday that the JSE’s All Share Index had ended 2022 flat, while the Nasdaq ended the year 33% lower and the MSCI was down 17.7%.
Another indicator that the JSE was being viewed more favourably among international investors, compared with other emerging markets, was that the R84 billion net outflow of funds from the local market was just over half the net outflow of the previous year, she said.
“We are starting to see a shift in international sentiment towards the South African market, relative to its position compared with other emerging markets, notwithstanding the power crisis, political uncertainty and low growth in the country,” she said.
She said the JSE was also concerned about the effects of a potential greylisting by the Financial Action Task Force (FATF) on investor sentiment.
Fourie said she expected investment in emerging markets would increase further with China opening up after its tight Covid-19 restrictions and if there was a “soft landing” in the US economy, and there were less risks perceived in the global geopolitical environment.
She said stocks on the JSE were undervalued, indicated by the high risk premium investors had placed on South Africa as a sovereign, relative to the value and growth of companies listed in the JSE.
Leigh Kohler, the head of Discretionary Fund Manager INN8 Invest, who spoke during a panel discussion on stock market retail trade, said most South African asset managers still found better value for their clients in the local market, as those that he had recently dealt with had not come near to increasing the offshore component of their funds to 45% of their portfolios, from 30%, as allowed by recent regulatory changes.
Fourie and FNB Stockbroking head of trading Priniel Gungudoo said there had been a big surge in retail investing on the JSE during the Covid pandemic, which Fourie attributed to some spillover from the increase in interest in cryptocurrencies, as well as increased digitalisation among consumers, particularly during the pandemic when they spent a lot more time than usual in front of their screens.
Fourie said retail trading was a growth node for the JSE, and some initiatives it undertook to grow this market was the approximate 20 000 students who participated in the JSE Investment Challenge every year. She said there were three key challenges to retail investing, access to the markets, price of trading and financial literacy.
Fikile Mbhokota, the CEO of Satrix Investments, said they had more inflows into their domestic focused Exchange Traded Funds (ETF) last year that their offshore funds, and substantial inflows into ETFs had been boosted by their efforts to make investments possible for as low as R10 to start, and by offering fractionalised investments.
“We want to democratise investing, so that the man on the street can start investing and create wealth. The low starting fee has helped us get clients on our new platform SatrixNOW,” she said.
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