How the JSE performed in 2020

In a year of record high initial public offerings (IPOs) globally, the Johannesburg Stock Exchange (JSE) has faced challenges with delistings by small caps and a lack of IPOs, along with complaints about high listing costs. Sam Mokorosi, Head of Origination and Deals at the JSE, joined CNBC Africa to discuss the performance of the exchange in 2020. Mokorosi noted that the JSE has had four listings in 2020, with expectations for more in the coming days. He mentioned that there has been a dearth of IPOs on the market due to challenges in the macroeconomic environment, particularly in the wake of the GDP declines. Despite this, the exchange has seen growth in structured products, such as Exchange Traded Funds (ETFs), with the market cap for ETFs surpassing 100 billion this year. Looking at the market's performance in 2020, Mokorosi highlighted a significant dip at the beginning of the lockdown but noted a strong recovery towards the end of the year, particularly in the SA ink sector. While the overall JSE performance was relatively stable, concerns remain about the recovery going into the next year. Delistings have posed another challenge for the exchange, with valuations remaining strong at the top end of the market while smaller caps struggle. To address the issue of high listing costs, the JSE is exploring measures to reduce expenses, including cutting costs for capital raising and trading for smaller companies. The exchange is also planning to launch a private market platform in mid-2021 to cater to companies looking to stay private for longer durations, aligning with global market trends. Despite being in the top 20 of global stock exchanges, the JSE's costs are comparatively lower, both in trading and listing perspectives. However, challenges persist for smaller listed companies, particularly regarding regulatory costs associated with being a public entity. The JSE acknowledges these challenges and is actively working towards solutions to support its issuers. Amidst the difficulties faced in 2020, the exchange remains optimistic about the future and is hopeful for a more robust IPO market in 2021.