The JSE is pursuing resource listings and believes that its highly regarded equity market, regulatory environ- ment and active global investor base make it an attractive listing destination for African mining assets, JSE issues regulation division director John Burke says.

Johannesburg started as a mining town and, owing to the number of resource assets in South Africa and Southern Africa, investors in this market understand investing in mining, he says.

“Mining is in our DNA. South African investors have a deep understanding of resource companies and an appetite for investing in them,” Burke notes.

Despite the tough listing environment worldwide and in South Africa, 16 resource companies, excluding reverse listings, joined the JSE in the last five years.

“Mining companies contribute 25% (R1.8-trillion) of the JSE equities market capi- talisation of R7.3-trillion. Of the 70 basic resource companies, 38 are dual-listed – contributing 80% of the overall basic resources market capitalisation.

“However, the JSE’s focus on the mining sector is not only from an equity-listing perspective but also from a debt, commodities, South African depositary receipts, black economic-empowerment segment and capital-raising perspective from local and international investors,” Burke says.

There are multiple benefits for mining companies that relate to listing on the JSE, he says.

“South Africa has a strong market infrastructure for mining stocks, which includes good trading systems, good liquidity, top- class stock market regulation, the strong protection of legal title, the ability for foreign investors to enter and exit the market with ease and the remitting of funds. These factors and the competitive costs of listing on the JSE determine the selection of this exchange as a listing destination,” he explains.

Despite the challenging economic environment worldwide, companies are able to raise capital on the JSE, the bourse’s business development manager, Patrycja Kula, says.

“The message that the JSE shares with companies that have African assets is that there is capital in South Africa. The JSE provides an enabling environment in which South Africans and Africans can benefit from their resources,” Kula says, adding that capital raising is made easier by the number of global investors that use the JSE to gain exposure to the African continent.

The tension in the mining industry is unfortunate for South Africa, Burke says.

“For example, the JSE’s statistics indicate a net foreign disinvestment from the JSE’s top 40 stocks on the equity market over the last 12 months as a result of foreign sales of resource stocks.

“The South African government shares our concerns and is working with business and labour to end the tensions,” he adds.

On a macro level, investor confidence is encouraged by the positive signs from the African National Congress’s fifty-third national conference, held in December, where delegates took a firm policy decision against the nationalisation of mining assets and confirmed their confidence in the business-friendly National Development Plan, Burke states.

Further, JSE-specific factors also prompt confidence, he says. “The recognition for the exchange’s world class regulatory capabilities and the well regarded equity market trading and clearing technology. Our sense is that investors take all these factors into account.”

As the JSE and mining are closely linked to the South African economy, it is necessary for the JSE to play a part in the national debates regarding mines, Burke states.

“The JSE engages with government at a high level through platforms such as Business Leadership South Africa and directly with key Ministries such as the National Treaury.

“The message that we – and, indeed, all business – communicate on an ongoing basis is that there is a need for business- friendly policies, coupled with policy cer- tainty,” Burke concludes.