African Capital Markets News » IT

JSE seeks more African equity listings in 2012, targets telecoms, mining and financials

Tom Minney — Tue, 10 Jan 2012 11:10:13 +0000

The JSE Ltd (www.jse.co.za), South Africa’s securities exchange, is hoping to attract more listings from the rest of Africa in 2012 and to expand its range of products and services. This year should also see the JSE installing its equity trading system in Johannesburg, to avoid dependence on a transatlantic cable connecting it to the London Stock Exchange.
Nicky Newton-King, who took up her post as CEO last week after succeeding Russell Loubser and the first woman to hold the post, told Business Day newspaper the plan was to offer more access to African companies and products such as exchange-traded funds products that enable people to access new investments: “With the rules of inward listing being relaxed, we would also like to attract more inward listings.” Besides IPOs, Newton-King said she expected to see more types of products, such as depository receipts and derivatives linked to companies being offered.
The JSE is in “good conversation” with several companies elsewhere in Africa over more potential listings. Last November she told Reuters: “We’ve got good conversations going … particularly on the continent.” She said the bourse is targeting mining, telecommunications and financial services: “Our approach is to look at issuers that need capital — need investors where their home markets might be too small. So we’ve got a lot of different segments we are looking at, but we are looking at particular issuers rather than trying to speak to everyone.”
The JSE already has 14 African companies listed, with 4 different debt instruments and 1 African ETF. Last year Reuters highlighted that some growing African firms preferred other international exchanges, particularly the London Stock Exchange and its AIM market, over the JSE for raising capital and listings, as highlighted in stories on this website. The JSE seeks closer cooperation with other African exchanges as it competes with other world bourses: “Clearly we need to be trying to find a way to cooperate with African exchanges, with African issuers to bring more African product to the table here in SA, where we have a lot of international investors everyday.”
The JSE attracted a total of 16 listings last year, with a combined market capitalisation of more than R35 billion (US$4.3bn), according to data from the JSE’s director of issuer services, John Burke. There were also a number of initial public offerings from the property sector. About 15 companies de-listed last year and 21 were on the suspended list. The number of new IPOs worldwide is lower since the start of the global financial crisis. Newton-King said there is a pipeline for potential listings in 2012: “Definitely there’s a pipeline, there’s always a pipeline. We never talk about the number since how many companies actually list and when they list is very much dependent on the economic circumstances of the country and whether the companies themselves are ready to list.
“We are looking forward to being able to attract a wider range of companies and investment opportunities on the JSE.”
The plan is still to use the same computer provider, Sri Lanka’s Millennium IT which is a subsidiary of the LSE. In terms of a February 2011 press release, the JSE is to migrate to a new system Millennium Exchange™, which the LSE has also adopted, in the first half of 2012. Millennium IT systems are used on many African stock exchanges.
Newton-King told Business Day she hoped this will minimise the outages experienced last year, which were linked to technical issues on the transatlantic cable. The JSE halted trading on its equity markets at least twice last year, which led to the exchange attracting criticism from trading houses, which often spoke anonymously to the media.
She said: “We are critically dependent on information technology (IT) and invest heavily in IT to ensure it is robust and able to handle increased volumes as the JSE grows. Our equity systems are run in London and there’s been some trading outages in the lines between us and London…. We are bringing the systems back to avoid that. We will continue to look at whether our technology is robust enough to withstand volumes.”
She did not give much information on rumours that the JSE is talking with SA Treasury on starting a trading market for carbon credits but said the JSE was looking at the possibility and how it would work with others.
Of the type of environment that she envisions at the JSE, Ms Newton-King says: “In 2012 I would like the JSE to be recognised as a place of excellence, a place where SA’s top talent would come and work, where our clients recognise that we provide products and services that are valuable to them.”
Her former post as deputy CEO no longer exists and duties that fell to her are being given to other people so that they can also grow.

IFC to invest up to $700m into new Africa telecoms

Tom Minney — Fri, 11 Nov 2011 00:04:34 +0000

The International Finance Corporation (www.ifc.org) plans to invest heavily in new African telecommunications projects, with spending plans for up to $300 million in the financial year to June and another $400m the following year. According to a story on Reuters, the private-sector financing arm of the World Bank group is aiming for projects that are not commercially attractive to traditional financiers.
Kent Lupberger, IFC’s global head for Technology, Media and Telecom, told Reuters at an industry conference on 9 Nov: “We would very much be looking to do $200-$400 million a year for our own account in Africa and ideally helping mobilise funding from other sources — commercial banks, other development institutions — to double or triple that.” The IFC is to focus on new telecoms opportunities such as data centres, tower sharing, IT services and “last mile” broadband connectivity, reaching to end users, among others.
The IFC has previously gave considerable finance to cellular companies but it is cutting back on this because the telcos are now established and have easier access to financing.

South Africa’s STT also to promote exchange solutions at ASEA

Tom Minney — Tue, 09 Nov 2010 14:08:36 +0000

The battle of the African trading systems hots up as South Africa’s Securities and Trading Technology company (www.tsti.co.za) also promotes its systems at the African Stock Exchanges Association gathering in Zambia (10-12 November).
STT has been operating since 1985, when it started writing systems for trading gilts and it provides many systems to Africa’s leading exchange, South Africa’s JSE Ltd. (www.jse.co.za) since its first systems were installed in 1994.
The company says its applications in use include:
• MITS – Multi-instrument trading system (called “Nutron” by the JSE).
• MICS – Multi-instrument clearing system (“Nuclears”).
• Fortress – a custodial management system.
• GCMS – global clearing and management system, used by all clearing members in South Africa, except 1 bank.
• CBMS – Central bank management system used by the South African Reserve Bank uses this system.
• MMIS –money market internet system, used by SARB for their tenders including for treasury bill tenders.
STT Managing Director Michelle Janke told African Capital Markets News: “On the JSE they trade equity derivatives, commodity derivatives, currency derivatives and fixed income – all run from our trading system called Nutron. We also provide the JSE with surveillance systems, clearing and settlement systems to enable a full solution, including the ATS (automated trading system).”According to STT, the JSE’s former fixed-income market, called YieldX, went live on STT trading platform in 2005 and the more recently acquired BESA (Bnod Exchange of South Africa) portion will be going live on STT system in March 2011.”
Ms Janke says: “The Fortress custodial management system is already used in the Botswana, Ghana, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Uganda, Zambia and Zimbabwe markets. We are in discussion with 4 other African countries to roll out our Exchange solution, with further details possible early next year.”
“Practical creativity is not just limited to product development. Innovation extends to processes and operations as part of a search for cheaper, simpler and more flexible business models. As STT was born in Africa and still resides in Africa we have had to design solutions which take into account a poor infrastructure, thus enabling these markets to perform all functions of any market for a reasonable cost.”

London tech crash could be topic in corridors at ASEA

Tom Minney — Fri, 05 Nov 2010 18:19:30 +0000

The London Stock Exchange (www.londonstockexchange.com) issued the following press release about its trading halt on Tuesday 2 November: “Investigations into this morning’s trading disruption on London Stock Exchange’s pan-European MTF (multi-lateral trading facility), Turquoise, have revealed that human error was to blame for the disruption that began at 08:23 a.m. this morning (sic). The issue was swiftly isolated, and normal trading resumed at 10:30 a.m. Preliminary investigations indicate that this human error may have occurred in suspicious circumstances. The LSEG take this matter very seriously and a full internal investigation has now begun. The relevant authorities have been informed.
“In light of this incident, coupled with necessary network upgrades to address ultra low latency and high flow inherent in the new platform, the Group has regrettably been forced to postpone its Main Market LSE technology migration for SETS. Given that December is an agreed change freeze period, the London Stock Exchange Group will work in partnership with customers to agree a date as early and practicably as possible in 2011 to reschedule the Main Market migration.”
This may give participants at the African Stock Exchanges Association conference in Livingstone, Zambia (10-12 November) something to talk about. According to reports an announcement was due later on 2 November about the LSE’s migration of its main trading platform, TradElect, to faster systems designed by Millennium IT (www.milleniumit.com), which the LSE acquired in 2009. Millennium IT is also a sponsor of the ASEA conference and has a key position on the agenda to speak on technology links to create more urgently-needed liquidity on African stock exchanges. MillenniumIT’s trading and central depository systems are already in use in many exchanges across Africa (see previous blog) and its influence is likely to grow.
Turquoise had gone live with the MillenniumIT trading system on 4 October and the LSE’s main platform was due to switch early in November 2010.
However, none of the sources quoted in a Financial Times article seem to think there is any problem with the LSE strategy to migrate to MillenniumIT’s modern multi-instrument trading systems. They note that the LSE needs modern high-speed trading systems to stay in competition for market share, including for European equities against competitors Chi-X, BATS Europe and NYSE’s Euronext – several intermediaries switched trades to these on Tuesday when Turquoise went down. Traders will need to be reassured about the LSE’s reliability and there are some questions about such a long delay in implementing the new system. It was also noted that many leading exchanges worldwide have been affected by tech problems and none has suffered lasting damage.
Another UK source reported on 4 November that an IT contractor with access to the LSE data centres has been suspended.
South Africa’s JSE, the Namibian Stock Exchange and Norway’s Oslo Bors are all exchanges which use TradElect because of links to the LSE, and could switch to MillenniumIT trading platforms in 2011.

$250 million TMT and real estate fund raising capital in East Africa

Tom Minney — Mon, 20 Sep 2010 20:45:55 +0000

Kenyan venture capital company East Africa Capital Partners Ltd (www.eacp.co.ke) is to begin raising its second fund next year, with a target size of USD250 million, after its success in fully investing $100 million of the first African Technology, Media and Telecommunications (ATMT) fund. The new fund is to focus on information technology, media and real estate.
In an email to African Capital Markets News, EACP chief executive officer Richard Bell says: “We’ve bet on our view that growth in mass market “home entertainment” in the next 10 years in Africa will be what mobile phones were to the last”.
On technology, the plan is to build massive data centres, generate clean energy to power them, and stimulate the creation of an outsourcing cluster in East Africa. We believe that East Africa is set to become Africa’s ICT Hub.
On real estate, Bell says “Africa is the fastest-urbanizing society in the world.
Africa’s emerging consumer class needs massive amounts of housing”. He says Kenya, for example, needs 250,000 homes a year and is only building 30,000. “Amongst other things our real estate strategy aims to make a dent in that supply-side bottleneck.”
Much of EACP’s Fund 1 investments were channelled through Wananchi Group Ltd. (www.wananchi.com), an Internet and cable television company. EACP has a 51% stake through its ATMT I Fund.
Last month (August 2010) Wananchi and Cisco announced a multi-year contract to roll out “triple play” (broadband, multichannel cable television and voice telephony) to 9 countries in East Africa: Kenya, Uganda, Tanzania, Rwanda, Burundi, Malawi, Ethiopia, Sudan and Zambia. According to the press release: “The contract will enable Wananchi to deploy Cisco’s integrated end-to-end network technology solutions, encompassing Cisco’s Borderless Networks, collaboration and data centre virtualization solutions, as their customer base expands and technology advances.”
According to a report on Bloomberg, Bell says: “We have invested in 10 new TV channels,” he said. The sports channel has started operating while the others will go live over the next month. “In Africa, what you have is satellite TV for the elite. What we are introducing is pay TV for the mass market.” The venture Zuku TV (www.zuku.co.ke) was introduced in October 2008.
The penetration of pay TV in developed economies is estimated at 70-80% compared with 20% in emerging markets, he said and expects this to grow fast over the next 5 to 10 years, if the market gets “the right product at the right price,” he said.
Private Investors, Export Development Canada and the US Government’s Overseas Private Investment Corp. (www.opic.gov) have invested a total of $90 million in Wananchi to date, while Emerging Capital Partners LLC (www.ecpinvestments.com), a Washington-based company that owns 49% of Wananchi, has invested $25 million, according to the report.
Bell told African Capital Markets news that ATMT Fund 1 was basically a TMT infrastructure fund. “Even though we have used Wananchi as the conduit for all of our investments from this fund the investments themselves are quite broad and include:
(1) SimbaNet – corporate voice and data business services
(2) Wananchi Telekom – through which we have invested in the undersea fibre-optic cable TEAMS, and a number of terrestrial cables dark fibre leases to create a international and long distance carrier of carriers business.
(3) iSat – a specialist VSAT and satellite business
(4) Zuku Cable – a mass market retail cable TV business that is deploying triple play across all the major towns in East Africa.
(5) Zuku Satellite – a Direct-To-Home (DTH) Satellite TV business
(6) Wananchi Programming – a media and content business that is building initially 10 new TV channels including a sports channel, a general entertainment channel focusing on African content, a documentary channel and 6 new movie channels.

African securities markets – shock move to integrated trading pool

Tom Minney — Thu, 01 Apr 2010 09:56:33 +0000

Fears of the potential impact of IT disruption on African capital markets, combined with a long-running initiative to pool fragmented markets for more liquidity, led to a shock decision by the African markets association today to switch to a single African market platform at short notice.
The pioneering African Securities Markets Association market body says that all markets should be closed by 12 noon today(Thursday), while trading on the new platform is expected to start with effect from 9am on 6 April, giving traders and market institutions a very busy long weekend to set up alternative infrastructure.
“The main aim of the new system, called FITS, is to ensure that we can go on trading shares, bonds and other securities despite any possible terrorist attacks or power cuts”, said Bernani Madofo, IT spokesperson for ASMA, said in a news release: “At the same time, we are taking the chance to combine all markets in one trading pool, and at a stroke eliminating the small and fragmented markets that have been harming efficiency and capital raising in our great continent”.
The new system will revolve around a return to floor trading in a single African location. All securities, including bonds, shares and derivatives, will be listed on electronic screens, and traders will set up offices nearby before heading down to the trading floor. Traditional trading systems including verbal and physical transactions, backed up by prompt data entry, have frequently been shown in leading research studies to be more effective for trading, turnover and market pricing efficiency than expensive computer systems. Broker Japie Enroni said of his former trading screen “It’s like watching paint dry, I’d love some action”.
After hurried debate, in a shock electronic ballot the ASMA membership voted to set up the new exchange in the International Conference Centre, Seychelles are now busy setting up offices in IT enabled locations such as Club Meditrade and five star hotel Le Bigroller, while working around the clock to gearing backoffices for settlement and clearing using the revolutionary Fun In The Sun (FITS) integrated “umbrella” client and trade settlement system using L-ounger software.
Extra liquidity is likely to be gained after trading hours as Africa’s tens of thousands of stockbrokers gather in local hostelries to prepare their throats for the next day’s trading action.

COSSE’s hub and spoke model

Tom Minney — Tue, 16 Mar 2010 14:28:06 +0000

Sunil Benimadhu, Chief Executive Officer of the Stock Exchange of Mauritius:
We have had lots of discussion on how to link different markets. Lots of work has been done from a technical standpoint. We will keep national exchanges as they stand and enable their members to reach the members of different exchanges. Technically it is possible, now we need to raise the financing and also to be clear that the investment will need to make sense in terms of flows from increased traffic.
In order to get more liquidity, we need to increase the free float, currently many companies have requirement of 20% free float but even that may not be available for trading, for instance controlling shareholder may still sit on a big shareholding and keep it from trading.

SADC stock exchanges move towards links

Tom Minney — Sun, 21 Feb 2010 09:54:55 +0000

According to Zimbabwe’s Herald newspaper (www.herald.co.zw), it is only months before the introduction of a hub-and-spoke interconnectivity model for SADC stock exchanges as “the first significant step towards the integration of one of Africa’s economic regions”.
According to reports, stockbrokers have sought a vehicle to provide information on companies operating in the region, monitor their performance and explore opportunities for clients. Geoff Rothschild, Director: Government and International Affairs at South Africa’s JSE Ltd (www.jse.co.za) and outgoing chair of the Committee of Southern Africa Development Community Stock Exchanges (COSSE), grouping 10 southern African bourses, is quoted as saying the system would “expose our neighbours’ business organisations to local and international investors. This hub will allow exchanges to connect to each other’s platforms and ultimately allow investors to trade on all SADC exchanges through their local brokerage.”
Major investment is needed to upgrade technology for the region’s exchanges and, although many are willing, financing is still being sought. The hub-and-spoke model is being developed by the Mauritius securities market, including the Central Depository and Settlement company, which has experience of capital markets development in other parts of Africa.
Zimbabwe Stock Exchange Chief Executive Emmanuel Munyukwi has been elected chair for the next 2 years. Lusaka Stock Exchange chief executive Mrs Beatrice Kansa is deputy chair. Mr Munyukwi, a former banker, is quoted as saying: “The position will help to put Zimbabwe back on the regional securities map and also enhance the visibility of ZSE to investors.”
CoSSE was established in 1997 and meets quarterly, its members with established exchanges are: South Africa, Namibia, Botswana, Mauritius, Mozambique, Swaziland, Tanzania, Malawi, Zambia and Zimbabwe. Its objectives include increased co-operation and links in operations, communications, regulations, technical skills development and other areas between the stock exchanges and to make SADC securities markets more attractive to local and international investors.

Cost cut on real-time JSE data

Tom Minney — Tue, 09 Feb 2010 23:29:15 +0000

Financial information company McGregor BFA (www.mcgregorbfa.com) is offering investors new products, Realtime, which will stream data from South Africa’s JSE Limited securities exchange at lower cost. The company will work with customers to see how much customization is needed for them to feed the data into their existing systems.
McGregor product manager Glenn Orford is reported in Business Day newspaper (www.businessday.co.za) as saying it will: “not only deliver a very competitive offering in terms of price and functionality, but our ability to customise the solution based on the client’s specific requirements will undoubtedly make it quick and easy to slot into existing systems.”
The fee could be a flat monthly rate or a fee per user and could also vary if the client wanted financial ratios and other components. According to operations manager Sandy Kerkhove the product could be as low as R55 (US$7.14) per month per terminal, excluding undefined JSE royalties.
McGregor says it aims to provide real-time foreign exchange rate data within the next two to three months and it is deciding whether to include other exchanges beside the JSE. McGregor reportedly has not decided whether or not to introduce real- time coverage of securities exchanges other than the JSE.
According to the company website: “The McGregor BFA Realtime product set provides a platform for both the corporate and private user to view real time stock market information streamed live to your desktop.”
The offering includes: Pure Internet delivery, live streaming prices, live indices and stock market announcements service (SENS), user portfolios and selective ticker.

Trade Google, Microsoft and other blue chips on the JSE Derivatives exchange

Tom Minney — Thu, 17 Dec 2009 15:36:16 +0000

South African investors can trade two of the best-known IT names through the listing of single stock futures (SSFs) on Microsoft (www.microsoft.com) and Google (www.google.com) on the JSE Limited (www.jse.co.za) on 11 December.

“The listing of SSFs on these two IT stocks, as well as the present SSF listing on Apple, will allow South African investors to further diversify their portfolios,” says Allan Thomson, Director of Derivatives Trading at the JSE.

Other International Derivatives (IDX) products trading on the JSE include “blue-chip companies” such as Berkshire Hathaway, Bank of America, Nokia, LVMH Moet Hennessy Louis Vuitton, BP, Vodafone and GlaxoSmithKline. Contracts are priced and settled in South African rand.

IDX listed on the JSE can be purchased through any JSE-registered broker in the same way as local derivatives products. This offers investors international exposure cost-effectively on a trusted trading platform with none of the counterparty risk associated with over-the-counter trading. Retail South African investors can trade in these 2 US companies without using their ZAR2 million foreign allowance but institutional investors have to comply with foreign portfolio regulations.

Microsoft Corporation is the world’s leading computer technology provider and largest manufacturer of software products. Its most profitable products are the Windows operating system and the Microsoft Office suite, according to the JSE press release. The company is headquartered in Redmond, Washington and is listed on NASDAQ.

Launched in 1996, Google Inc is a recent arrival but has taken the lead as the world’s most popular Internet search tool. The company derives the major portion of its revenue from advertising related to its Internet search, email, online mapping and social media services. Google has its headquarters in Mountain View, California and is listed on both NASDAQ and the London Stock Exchange.