South Africa’s National Treasury
said it intends to allow trade in shares of offshore companies
listed on the nation’s stock exchange to be classified as local,
easing rules restricting foreign stock ownership.
“The National Treasury proposes that all inward-listed
shares on the Johannesburg Stock Exchange be classified as
domestic for the purposes of trading on the exchange and be
included in its indices,” the Treasury said in the mid-term
budget released in Cape Town today. “This proposal is intended
to enhance the ability of the JSE to attract new listings and
boost investments into Africa.”
South Africa’s exchange controls limit the foreign assets
local investors may own. On Feb. 23, Finance Minister Pravin Gordhan released a discussion paper aimed at changing the so-
called prudential limits.
The Treasury said it had decided to change the rules after
considering public submissions on the discussion paper. Further
details will be provided by JSE Ltd. (JSE), which manages South
Africa’s stock exchange and lobbied for the changes.
“The positive move provides a further boost for the
reputation of the country’s markets, by enabling the JSE to more
aggressively pursue a wider range of investment possibilities,”
JSE Chief Executive Officer Russell Loubser said in an e-mailed
statement today. “It will take time to work through the
practical steps to implement this and we will make an
announcement in due course.”
Volume Increase Likely
The volume of trade on the JSE is likely to rise following
the changes, Craig Massey, head of stock broking at Sanlam
Private Investments, a unit of Sanlam Ltd. (SLM), said by phone from
Cape Town.
There’s “growing concern that the JSE is missing a lot of
the trades that are taking place in these stocks and they are
trying to bring those trades back onshore again,” Massey said.
Funds that track the JSE’s largest companies will be
obliged to invest in British American Tobacco Plc (BTI), which listed
in 2008 when Remgro Ltd. (REM) and Cie. Financiere Richemont SA spun
off their combined 30 percent stake, once the changes take
place, Massey said. With a market value of 712 billion rand ($90
billion), it will be the largest company included in the
FTSE/JSE Africa Top 40 Index.
“Prudential institutions would still be required to report
their foreign exposures to the regulatory authorities, subject
to regulatory criteria,” the Treasury said.
British American
British American Tobacco is among the shares classified as
an inward listing, or a foreign company trading on the JSE. This
means the stock and others such as Platmin Ltd. (PPN), Net 1 UEPS
Technologies Inc. (NT1) and Aquarius Platinum Ltd. (AQP) can’t be added to
indexes as local investors would reach prudential limits.
The so-called London Five of Anglo American Plc (AGL), BHP
Billiton Plc (BIL), SABMiller Plc (SAB), Old Mutual Plc (OML) and Investec Plc (INVP),
whose shares trade in both South Africa and the U.K., will still
be treated as domestic listings, and won’t be affected by the
changes to the rules, Ismail Momoniat, a deputy director-general
at the Treasury, said in an interview.
To contact the reporter on this story:
Mike Cohen in Cape Town at
mcohen21@bloomberg.net
To contact the editor responsible for this story:
Andrew J. Barden at
barden@bloomberg.net
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