JSE delivered a strong performance in 2014

The Johanneburg Stock Exchange (JSE) delivered a strong performance in 2014, making it more difficult for competitors to take on the local stock exchange, rated the 19th largest in the world.

The JSE, as it stands, continues to be a profitable organisation, and in 2014 earnings per share rose 25% to 742.4c. Group earnings before interest and tax increased 22% to R704m.

An ordinary dividend of 400c per share and a special dividend of 80c per share were declared, indicating that the JSE had strong capital resources to take on a competitor, an analyst said.

CEO Nicky Newton-King said that the JSE’s investments over the past few years had affected the income statement in the short term. “We now know the issues we need to tackle in order to achieve our strategy.”

Those include costs, as the JSE is a fixed-cost business, largely. Personnel, technology and technology-related costs account for 68% of all costs. “We continue to demonstrate sound cost control, with total operating expenses up only 5.5% in 2014.”

The 4AX consortium recently announced that it planned to launch a new exchange to take on the JSE. The group aimed to do this mainly by means of over-the-counter trade, and would target the JSE’s AltX exchange, which caters for smaller listings.

The consortium launching the new exchange includes financial services company Bravura, Global Environmental Markets, Trifecta Capital, Intercontinental Trust, Capital Markets Brokers and NWK.

To be successful the new exchange will have to cut into the JSE’s dominant position in equity market trading, which will not be easy. The figures released on Thursday indicate the JSE’s equity market division lifted revenue 11% to R426m with post-trade services growing 20% to R299m. Market data was up 15% to R203m.

The JSE is also in a strong cash position, with R1.6bn in cash, and almost no debt.

Momentum Wealth portfolio manager Wayne McCurrie said the JSE’s results were very good. “It will be very difficult for any competitor to take on the well-established JSE in its main market.” The JSE, on average, records a daily turnover of R16bn.

The consortium has indicated it could invest up to R30bn in the new exchange, competing directly with the AltX.

Source:BusinessDay, South Africa