July 10, 2023
By Troye Brady, Research Consultant at Aprio Investor Relations
It is well documented that the JSE has been losing listed companies steadily over the last decade or so. To be clear, there have been new listings over this period, but the number of companies delisting from the exchange have outnumbered those by a factor of two to three. There are several reasons for the delistings and not all have to do with the JSE specifically (ie the alleged onerous rules and costs). In fact, when looking at the JSE Metals and Mining sector, JSE rules and costs are one of the lessor reasons.
Based on Aprio analysis, the JSE Metals and Mining sector (including AltX companies) have reduced form around 54 companies in 2017 to 43 at the start of 2023, in other words a net loss of 11 listed companies over the roughly 6-year period (See chart 1 below)
While this may look like a very negative trend, the reality is that most of those companies delisting were quite small, whereas the companies that remained listed are significantly larger and derived huge benefits from their listings. This is evidenced by the Metals & Mining sector market capitalisation increasing from around R2.2 trillion in January 2017 to R7.4 trillion by January 2023, a more than three-fold increase or compound average growth of 22% per year. (See chart 2 below)
Even if one converts the Rand value of the JSE Metals and Mining sector market cap to US dollars, it still represents an increase from US$166bn to US$428bn over six years, ie compound average growth of 17% per year.
Looking at listing activity over the last six years in more detail, there were twice as many mining companies delisting (-19) as opposed to new listings (+8). The only sector with a net gain was AltX, with 3 new listings in metals & mining activity versus only 1 de-listing. One must be careful when tracking listing activity, as several companies have changed name and/or moved to another sub-sector, which can be mistaken for a new- or de-listing. We have excluded those.
Looking at market capitalisation, the Metals & Mining sector lost more market cap through de-listings (R61bn) than it gained in new listings (R22bn) since 2017. This is mostly due to de-listings of two relatively large-cap companies, namely Assore (roughly R37bn in 2020) and the Gupta-controlled Oakbay (about R16bn in 2017). Lonmin was a shadow of its former self by the time it was acquired by Sibanye-Stillwater and delisted in 2019 (worth roughly R2bn).
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