The listing of giant multinational resources company Glencore Xstrata on the JSE late last year is another symbol of the vibrancy and importance of the bourse’s mining sector.

Glencore’s secondary listing on the JSE follows a primary listing on the London Stock Exchange and another secondary listing in Hong Kong. With a network of nearly 100 offices around the world, Glencore’s diversified operations encompass over 150 mining and metallurgical sites, oil production and agriculture.

It had a JSE market cap of around R739 billion at the time of going to press, the biggest of the miners and the third largest overall.

Needless to say the significance of Glencore joining the JSE was a highlight for the exchange in 2013.

‘The biggest volume traded among the new mining listings was on Glencore’s first day, when about 50 million shares changed hands,’ says  Patrycja Kula, Business Development Manager: Issuer and Investor Relations at the JSE.

‘It is a huge accolade for the exchange that multinational companies, given their size and stature, would select the JSE for a secondary listing.

‘This sends out a strong message that there is capital and value when listing on the JSE. Listing enhances growth prospects and profile on the continent for issuers.’

Kula says there are currently 67 companies listed in basic resources (mining and industrial metals and mining) out of a JSE total of 385. Of the 67, 35 are dual listings. ‘The basic resources sector contributes 23%, or R2.4 trillion, of the overall JSE market cap of R10.5 trillion,’ she says.

‘It is a huge accolade for the exchange that multinational companies would select the JSE for a secondary listing’

PATRYCJA KULA, BUSINESS DEVELOPMENT MANAGER: ISSUER AND INVESTOR RELATIONS, JSE

Kula points out that of the 12 companies that joined the JSE in 2013, four listed in the mining sector and of the R93 billion in capital raised on the exchange last year, ‘companies in the mining sector on the equities market raised R12 billion’.

‘A JSE listing also reflects well on SA financial markets and sends a positive message to potential issuers, both local and international. It is so important that companies, especially in the resources space, choose SA and the JSE to list because if they don’t, it just makes it so much harder for SA investors to diversify their portfolios,’ she says.

Although Glencore’s listing received a large amount of publicity in the media, Kula says all listings are of importance to the exchange.

‘Three out of the four mining companies that listed on the JSE last year traded actively, underlining the JSE’s status as a highly liquid market, despite negative sentiment towards mining this past year,’ she says.

That adverse feeling has been mostly directed at junior miners, which have taken a battering since the global recession, and generally are battling to raise capital.

‘Globally junior gold stocks remain close to rock bottom. However, throughout this time positive news regarding new discoveries and the interest of private equity firms are beginning to take a strong interest in the junior mining sector. This is great news for the sector and shows that investors see value when investing in resources. Listing activity is cyclical by nature and it is to be expected that it will follow movements in the business cycle,’ she says.

The JSE is also being extremely active when it comes to guidance and the prospects of listing, according to Kula.

‘We are constantly engaging with companies across various sectors.’

She says: ‘A listing on the JSE gives companies the ability to raise capital, which means they are then able to expand operationally or strategically. These markets are also favourable to purchasing other assets and a listing gives these companies the ability to use their shares as acquisition currency to make further purchases.

‘SA exchange controls have been relaxed over the years and being listed on the JSE, investors can now invest with no exchange control restrictions.’

By Patrick Farrell
Image: Fredrick Broden/reneerrhyner.com