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Myth-busting black ownership on the JSE

MONEYWEB / 27 November 2017 - 00:26 / HILTON TARRANT

An independent report, commissioned by National Treasury, attempts to quantify “black ownership relative to the value of JSE-listed companies” and suggests that previous estimates were on the high side.

It estimates that BEE ownership is at 9% of total JSE market capitalisation, from a previous widely-quoted estimate of 10%, while black ownership through institutional funds is 11%, versus the previously cited 13%. In its methodology, it describes ‘BEE ownership’ as total ownership by black South Africans (as per the BEE codes), including empowerment schemes/structures and direct ownership.

The report estimates that BEE ownership is at 9% of total JSE market capitalisation, from a previous widely-quoted estimate of 10%. Picture: Moneyweb

The “market value” as defined in the study is R5.497 trillion: South African companies dematerialised on Strate (the country’s central securities depository) as at end-2016. This means black (‘BEE’) ownership is R495 billion, while black ownership through institutional funds is R605 billion.

The previous total, with black South Africans “holding at least 23% of the Top 100 companies listed on the JSE”, has been held up by the exchange as the most accurate figure, based on research it announced in 2015. That study, conducted by Alternative Prosperity, was the most recent on the matter and used data to the end of 2013. At that stage, it held that aside from the 23%, white South Africans held 22% (directly and indirectly), with foreign investors holding about 39%. It had yet to analyse the remaining 16%.

One of the major differences between the draft report, published on October 9 by Treasury1, and the JSE/Alternative Prosperity study is that the former excludes cross holdings, which results in a smaller market capitalisation. The report, compiled by Lynne Thomas, “an independent researcher and consultant, formerly with the Centre for Research in Economics and Finance in Southern Africa at the London School of Economics”, deliberately includes “all forms of ownership, including the concentration of corporate ownership that can occur through cross-holdings”.

It further proposes an ‘Ownership Monitor’ for “tracking trends in the composition of ownership over time”. As a base, it provides a breakdown of the “broad composition of ownership” as well as types of major shareholders, which own 5% or more of a company’s shares (excluding foreign-domiciled entities listed on the JSE). Given that it commissioned the study, one would imagine Treasury may intend to use this as a definitive or authoritative source of data in future.

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LINK - https://www.moneyweb.co.za/news/south-africa/myth-busting-black-ownership-on-the-jse/

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