L2_JSE - The SA Equity Scene Today The role players in the...

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The SA Equity Scene
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2 Today… The role players in the SA equity market. Overview of the JSE. Some JSE peculiarities and terminology. Share buying costs.
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3 The Role Players in SA 1. Brokers 2. The Public Investment Commissioners (PIC) 3. Insurance companies 4. Investment managers Unit trusts Pension and Provident funds Private trusts 5. The Financial Services Board (FSB) 6. Over-the-Counter (OTC) Market 7. The Johannesburg Securities Exchange (JSE)
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4 Stockbroking Firms Can act as both: Agents Principal (i.e. buy for their own account) Charges commission as agents and facilitators of trading Only accredited institutions allowed to operate within an exchange Soft dollars ”: provision of free research to institutional clients in hope of getting more trading business
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5 The PIC The largest investment manager in SA assets under management of R 910 billion plus (as at March 2010). About 10% of listed equities (and 1/3 rd of bond market) Manages pension funds of the SA public service (mainly GEPS) Increasingly, shareholder activist and empowerment focus not only maximisation of returns for pension-fund members
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6 Insurance Companies Cash outflow commitments towards clients ( life insurance companies) or cash outflow risk ( short-term insurance ) Portfolio of assets (including equities) to match liabilities Assets should deliver returns over time to fund liability outflows. Asset income streams should ideally match expected liability outflows Often long-term holders of equities and engage in script lending (lending their shares to short sellers for a fee)
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7 Investment managers Invests money on behalf of clients pension funds, wealthy individuals, retail investors (mainly in mutual funds). Charges fee for managing investments % of funds under management plus %of performance that is better than an agreed-to benchmark Pension funds invested in SA in 2007: approximately R 4,000 billion. Of this, 50% - 60% was invested in equities.
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8 The Financial Services Board Established by statute but funded by SA financial industry Oversees regulation of financial markets and institutions including JSE, insurers, fund managers, stockbrokers But not banks, which fall under SARB Has authority to close down a financial services business ( e.g., Fidentia) in order to protect investors etc.
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9 SA OTC Market No official OTC in SA at the moment. BJM and PSG operated OTCs until the FSB closed them down over a legal technicality in 2006. The combined value of the shares trading on these two OTCs at the time was R20 billion.
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10 The JSE
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11 JSE History 1886 Discovery of the Rand Gold Fields.
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L2_JSE - The SA Equity Scene Today The role players in the...

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