While immigration agencies report a spike in locals "packing for Perth" and the Australian Bureau of Statistics adds thousands of South Africans every year as "permanent additions" to its population, Leila Fourie couldn’t resist the urge to come back to her country of birth.
The newly appointed CEO of the JSE had been in Australia for three years when she learnt that the exchange was looking for a successor to Nicky Newton-King. She saw this as an opportunity to pursue a subject close to her heart: use the financial markets to drive financial inclusion.
"The exchange has an important nation-building role to play," says Fourie. The JSE, she argues, is an instrument that SA can use to fast-track transformation.
Her mission is a momentous task, given that the JSE has always been seen as the face of capitalism in SA. But she is up for it. Her first meeting with clients — she replaced Newton-King on October 1 — was with the Black Brokers Forum.
"This is a high priority for the exchange, both within the organisation and in terms of market structure," she says. "We need to ensure that we are prioritising and putting in place enabling infrastructure to drive more inclusive growth." Fourie wants to see the exchange support unlisted small and medium enterprises more than it did in the past.
The most refreshing aspect of Fourie’s transformation dream is that it goes beyond the usual attempts to ensure that market participants and capital owners represent SA’s demographics.
To her, transformation also means looking at other asset classes and trying to bring in alternatives — including infrastructure, green bonds and other vehicles that can boost capital raising for small business.
Small-business funding and infrastructure-building is mostly supported by unlisted asset classes like private equity, venture capitalists and angel investors. The 27four BEE.conomics survey published in September showed that fundraising was the biggest headache for these private-market players. Fourie says because small business or the pre-listing market is the pipeline and a feeder to the listed market, it was in the best interest of the exchange to boost it.
"Any exchange must be grounded in the economy in which it operates," she says. "For us to build and grow, we can’t rely exclusively on inbound and international investments into the country."
But Fourie is also stepping onto a podium that has other pressing issues, and she will need to address these first.
These include boosting trade volumes in a stagnant economy and convincing international investors who are taking their money out of emerging markets that SA has a lot to offer, even after the accounting scandals that she admits have affected confidence.
Fourie has to make sure that the JSE shines brighter than new low-cost exchange A2X Markets, which has attracted secondary listings of JSE top 40 companies including Naspers, Sanlam and Standard Bank.
In the past year, the JSE experienced a 13% decline in the value of trades, Fourie says. Though this was slightly better than the -18% global average reported by the World Federation of Exchanges over the same period, the JSE depends mostly on trading revenues to increase profits. Boosting trade values and volumes will be one of the key measures of her success. Fourie is aware of these pressures.
"We definitely have been in a low-growth operating environment because we are subject to global pressures, the quantitative easing which dramatically affects flows to the emerging markets and the vagaries of our own economy. That said, I haven’t lost optimism."
Part of the problem contributing to lower trading activities, which in turn affects the liquidity of stock exchanges, is the decrease in the number of listings. In September there were 356 companies listed on the JSE main board against a record high of 485 in September 2002, according to figures from research firm CEIC. Future growth will probably not come from listings of new companies, as was the case in the past. Instead, says Fourie, the JSE has to be more innovative. It is looking at introducing more products to be traded on its platform.
"Already we have many first-to-market initiatives in the sustainable development space. The JSE was the first to introduce the SRI index. We were the first emerging-market stock exchange to introduce green bonds. Now we are working with the market to introduce other products that will unlock and innovatively boost trading."
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