JSE profits increase, despite volatile market

The Johannesburg Stock Exchange (JSE) reported a positive six months for the first half of its financial year – despite the macro-economic challenges caused by the global Covid-19 pandemic.

The owner and operator of Africa’s biggest and most liquid market for shares, bonds and derivatives, reported a 22% increase in net profit after tax to R485 million, while total revenue increased 22% to R1.32 billion.

JSE group CEO Leila Fourie said she’s pleased with the results, which were achieved amid a turbulent and volatile market, with record trading volumes amplified by the sovereign credit rating downgrade, South Africa’s exit from the World Government Bond Index, and rand volatility.

The JSE recognises the substantial impact of the pandemic on its clients.

“We feel that it shows that we understand the dynamics of the crises that we geared for change. We do recognise a challenging backdrop in the macro economy.

“We think that it shows that the JSE is resilient and it generated quality earnings and showed that we maintained a strong cash generative position and that is obviously vital for investors in the current market,” Fourie said.

Its group earnings before interest and tax (EBIT) increased by 26% to R523 million, while earnings per share (EPS) rose by 22% to 569.1 and total headline earnings per share (HEPS) rose by 22% to 569 cents.

She explains that this is despite 14 delistings in 2019, because May and June were marked by an increase in activity in corporate actions.

“In a global market, we have seen a contraction in a number of companies that are listing for initial public offering (IPOs). We have seen an uptake in bond markets and much more capital raising there and also in structured products.

“We have had 19 companies issuing right issues since the crisis, as companies are either looking to buffer their balance sheets or to expand their markets at the back of [the] acquisition trail, that they are looking to invest in other companies,” Fourie said.

She also has noticed an increase in capital raised in the secondary market.

Fourie added that on the sustainability front, the JSE has seen a growing demand for green bonds in emerging markets, driven by private borrowers looking for investments in sustainable energy, cleaner water, transport and smart buildings.

Revenue increased by 2% to R75 million due to higher annual listing fees.

This article first appeared on Moneyweb and was republished with permission.

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