Black vs white ownership on the JSE

New research finds that black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange as at the end of 2013.

The shares held by black investors include 10% held directly (largely through BEE schemes) and 13% through mandated investment – mostly through individuals contributing to pension funds, unit trusts and life policies.

White South Africans hold approximately 22% of the Top 100 companies, while foreign investors hold about 39%, up from 34% in 2011.

The findings form part of independent research assessing share economic interest constructed by BEE advisory group Alternative Prosperity using data from the JSE, Strate and a large number of investors.

The research noted that a further 16% of the Top 100 shares which are still to be analysed are likely to include a mix of shareholder demographics, including black South Africans.

In the previous report published by the researchers, they estimated that black economic interest on the exchange was 21% as at end-2011. This grew to 22% as at end-2012 and 23% a year later.

“The shareholder analysis over this period demonstrates that economic transformation is taking place,” said JSE CEO, Nicky Newton-King.

The biggest proportion of investment funds of both black and white South Africans is held through mandated investments, the report said.

Alternative Prosperity estimates that at end-2013 mandated investments accounted for about 37% of total investment into the JSE’s Top 100 companies.

Retirement funds are the biggest South African investors on the stock market, the largest of these being the Government Employee Pension Scheme (GEPF) whose members include most civil servants other than those working for municipalities.

Chairman of Alternative Prosperity and leader of the research team Trevor Chandler said that broken down by industry, Financials contribute the most towards BEE economic interest values.

BEE performance tends to thrive where industries have significant reliance on sales to government, where BEE plays a role in the granting of business licenses and where sectors have made commitments in terms of sector codes.

Direct investments accounted for about 24% of total South African investment into the Top 100, the JSE said.

Of the total 24%, less than a third is owned by individuals with portfolios (or 7% of the total equity capital) made up by black (less than 1% of the Top 100 by value) and white (about 6%).

“Whilst the level of economic interest by black South Africans is linked to our country’s history, the low level of direct participation on the exchange by all South Africans is also linked to generally low financial literacy and related savings,” said Newton-King.

“South Africans are often tentative about investing directly on the market. The financial services industry is working to improve financial literacy,” the group’s chief executive said.

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