Foreigners own more of the JSE than blacks

2010-11-06 13:41

Black South Africans own 23% worth of the listed shares on the JSE. White South African shareholding represents 45%, with the remainder held by foreigners (31%) and the state (1%).

The holdings of black South Africans – Africans, coloureds and Indians – in JSE companies have grown marginally from 22% in 2000.

The most significant shift in ownership over the past 10 years happened in foreign ownership. In 2000 the interest of foreigners surged from 6% to 31%, significantly denting white ownership, which fell from 71% to 45%.

But the aforementioned domestic trend is likely to change further as trans­formation in the workplace gains ­momentum and more blacks ­contribute to retirement and other management funds.

These are the key findings from ­research into the demographics of shareholders in listed companies commissioned by Sake24, City Press’ sister publication and ­conducted by Mike Schüssler, head of independent economists group economists.co.za

The topic of black shareholding on the JSE is currently being hotly ­debated, with divergent opinions on the real state of affairs.

Some senior government officials like Jimmy Manyi, president of the Black Management Forum and suspended director-general of the ­labour department, estimate the figure to be as low as 5%.

The findings by economists.co.za that 23% of listed companies is already in black hands shows that empowerment and affirmative action initiatives are flowing through the economy right into the JSE.

It also means that the government’s target of 25% black ­ownership of companies by 2017 is achievable.

The research took into account all direct and indirect investments in the JSE, including managed funds such as retirement funds, unit trusts and individual investors.

Cross shareholding between ­companies was excluded.

“This research shows that there has been a significant transfer of wealth over the past decade and that the actual level of black ownership of JSE-listed companies is markedly higher than is generally believed,” says Schüssler.

The greater contribution by black South Africans to retirement funds has especially played a major part in the transfer of wealth.

These findings follow in the wake of recent research by Trevor Chandler & Associates and the JSE, which concluded that blacks hold 18% of JSE shares through direct empowerment transactions. However, it excluded indirect holdings through managed funds such as pension funds and direct retail investment by black individuals. The research by economists.co.za aimed to measure the demographics of these managed funds and retail investors.

Schüssler says though the research shows that transfer of wealth has ­taken place, white South Africans are still much richer than black South ­Africans.

“The research shows an average white person has 16 times more share assets than the average black person. In 2000 the ratio was 28 times.”

The reason for this change is that black people’s contribution to ­pension funds is increasing and that of whites declining.

The total contribution to retirement funds by black South Africans already amounts to 47% this year ­after being only 32% in 2000.

Managed funds represent 49% of the market value of the JSE. These include all retirement funds, unit trust funds and life insurance funds.

“The dynamics of managed funds will change even more in the next few years. Almost four million black South Africans currently contribute to ­retirement funds while a million of their white compatriots do. A large portion of this money finds its way to the JSE and will create a ­greater shift in shareholding from white to black,” says Schüssler.

Though fewer whites contribute to retirement funds their total contribution is still greater and for the current year it will amount to 53% of the total investment by individuals in retirement funds. This is also changing as the contribution from blacks has ­increased from 32% in 2000 to the 47% in 2010.

“If this trend should continue black people will own much more than 40% of managed funds by 2020,” says Schüssler.

Retail investors represent only 247 000 individuals, who own only 19% of the value of the JSE. This segment is still dominated by white South Africans, with a figure of 76% of the investments.

This scenario has also changed significantly in the past decade, when white South Africans owned more than 86% of the segment in 2000 compared to the 14% of their black counterparts.

Schüssler says it is evident that transformation in the work environment and the attendant growth in contributions by blacks to retirement funds and other managed funds are creating momentum in wealth transfer.

“The main problem remains job creation,” says Schüssler.

“If South Africa could create more employment, contributions by black South Africans to managed funds would increase and transformation in JSE shareholding would be accelerated.”

» Visit sake24 to download the research document.

– Sake24.com

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