How to Invest in South African Shares and the FTSE/JSE All Share Index

The FTSE/JSE All Share Index, is the benchmark stock gauge of the Johannesburg Stock Exchange. The JSE is the oldest African exchange and the continent’s largest by market capitalization. 

The exchange ranks 19th among the world’s stock exchanges by the combined market value of its listed securities at just over US$1 trillion. 

Brief History of the JSE

The JSE is South Africa’s main bourse, founded  in 1887 by Benjamin Wollan, during a gold rush. 

The discovery of gold on the banks of Witwatersrand in June 1886 began the transformation of South Africa from an agro-based economy to a mineral-based one. There was a need for a transparent marketplace for buyers and sellers to transact on these new found mineral resources. The JSE was founded to fulfill this need. 

Since then, the market has evolved into one of the major exchanges of the world. The JSE acquired a number of smaller exchanges. These include the Bond Exchange of South Africa (BESA) as well as the South African Futures Exchange (SAFEX). These acquisitions enabled the JSE to act as a trading venue for up to five asset classes. Stocks, bonds, commodities and interest rate derivatives are all traded on the JSE. It has also launched the AltX, which is an exchange for small and mid-cap stocks, equivalent to the penny stocks in the US.

The JSE is also listed on the Johannesburg Stock Exchange as JSE Limited, under the ticker JSE.

 

Functions of the JSE

The JSE’s primary function is providing a trading venue for investors and other market participants. Here’s a summary of the roles that the bourse fulfills:

• Businesses can approach the JSE to raise capital, either through public offers or rights issues.
• The JSE links investors and traders with publicly listed companies.​
• The JSE provides a regulated and safe trading venue for investors and traders who are interested in trading the listed stocks in South Africa.
• By providing a transparent environment for trading, the JSE is instrumental in fraud detection and prevention in the cause of market activities.
• The JSE provides an avenue for pension funds and other retirement savings funds to invest their holdings in low risk investment vehicles.
• Provides information about the prices of traded assets on the exchange, which can be viewed and monitored globally.

JSE Market Segments

The JSE operates a tiered system of classification for its listed companies, and divides the securities traded on it into three market segments. These segments are as follows:

• Main Board: This is the primary category of listing and features the most capitalized stocks on the JSE. There are 40 of such stocks, tracked by the FTSE/JSE Top 40 index. 
• AltX: AltX stands for “alternative exchange”, which is where small and mid-cap stocks are listed. These stocks have less capitalization than the stocks listed on the Main Board.
• Debt Market: The JSE also operates a bond market, where government and corporate bonds can be traded. This is the broadest market segment on the JSE as it features more products than the Main Board and the AltX. This segment features a lot of institutional participation from Africa and beyond.

The JSE is the largest exchange in Africa and also has the greatest market depth because it attracts listings from international companies. Many of the world’s biggest companies also list on the JSE and are part of the JSE All-Share Index. This makes the bourse a sought-after destination for investors looking for profitable exposure to the emerging markets of Africa and their investment capital.
 

 

Regulation

The JSE, as well as its listed entities and the staff who work within the exchange, are all regulated by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA). This is known as the Twin Peaks Model of regulation, which provides oversight by two regulatory bodies. The FCSA oversees the equities market as well as the operations of the trading infrastructure for this market, and the PA acts as a watchdog for financial institutions, the debt market and insurance corporations and reports to the central bank of South Africa, the South African Reserve Bank (SARB).

 

 

Main sectors on the JSE 

The stocks that are listed on the JSE are divided into sectors, which reflect the consumer profiles for these companies’ products. Sectors featured on the JSE include banking & financial services, food & beverages, agriculture, mining, mobile telecommunications, real estate, technology, healthcare, energy.

• Mining: Anglo-American Ltd, Glencore Plc, Bauba Platinum Limited, Atlatsa Resources Corporation, Central Rand Gold Ltd, DRDGold Ltd.
• Telecommunications: MTN, Vodafone, Cognition Holdings Ltd, Huge Group Ltd.
• Food/Beverage: Nutritional Holding Limited, Shoprite Holdings Limited, Oceana Group Limited
• Banking & Financial Services: ABSA, Nedbank, RECM and Calibre Limited, London Finance and Investment Group, etc. Alexander Forbes Group Holdings Ltd, Anchor Group Limited, BK One Limited, Blue Financial Services Ltd, Capitec Banks Holdings Ltd.
• Real Estate: MAS Real Estate Company Ltd, Mainland Real Estate Company Ltd, Castleview Property Funds Ltd.
• General Retailers: Homechoice Ltd, Imperial Holdings Ltd, Curro Holdings Ltd.
• Oil & Gas (Energy): Efora Energy Ltd, Keaton Energy Holdings Ltd.
• Construction: Afrimat Limited, Aveng Ltd, Basil Real Holdings Ltd.

Investing on the JSE with ThinkMarkets 

ThinkMarkets now offers its clients the ability to invest directly into JSE-listed shares, Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs) on the ThinkTrader mobile app to start your journey to build wealth through equity investments. 

 

 

Trading South African Share-CFDs on the MT4

People who prefer a shorter-term approach and aim to exploit price fluctuation to make money can trade share Contracts for Difference (share CFDs) with ThinkMarkets. Traders can get access to South African share CFDs on the ThinkMarkets MT4 platform. These include: 

• First Rand

• British American Tobacco (BAT)

• Compaigne Financiere Richemont (CFR)

• Kumba Iron Ore

• MTN Group

• Naspers

• SASOL

• Shoprite

• Standard Bank

• Vodacom

Some of the advantages of trading share CFDs on the ThinkMarkets MT4 include:

• You can profit from bi-directional trading: rising share prices using long orders, or from falling prices using short orders.

• All trades are leveraged and leverage is adjustable within allowed ranges.

• You have access to charts and other tools/indicators with which to conduct technical analysis.