JSE Ltd in staggering profit

16 August, 2006 at 5:47 pm | Posted in Companies | Leave a comment

The JSE released a resounding first set of financial results yesterday, showing that its profit nearly doubled to R92m in the six months to June.

The JSE listed on its own exchange only in June.

But amid a booming market in which the exchange’s all share index climbed 17% during the first six months of the year, this profit was not unexpected.

Far more pleasing to CEO Russell Loubser was that the total trade in stock on the JSE had doubled to R1,1-trillion, while the bourse’s liquidity climbed to 46% from less than 40% last year.

This liquidity improvement means that money traded on the JSE during the six months was equal to 46% of the combined market capitalisation of those companies listed on the exchange.

“This means there are more people trading. It’s not just the same people trading bigger amounts; there are more entrants into the market,” Loubser said.

But the JSE still wanted to lure more private individuals into trading.

Loubser said that less than 10% of South Africans held stock on the JSE, compared with a country such as Australia, where more than half the population traded on the stock market.

“Fifteen years ago, Australia was at similar levels to where we are now,” he said.

Loubser said it would be “really arrogant” to divorce the JSE’s profits from what was happening in the country.

“The market is doing really well but only because the entire country is doing well… because macroeconomic policies are sound,” he said.

The largest contribution to profits came from fees earnings on equity trading. These brought in R68m compared with R38m for the same period last year, while derivative trading made R56m.

The JSE’s profit would have been even higher if not for the fact that its tax exemption has expired, resulting in a payment of more than R43m to the South African Revenue Service.

While profits increased, expenses shot up 47% to R260m from R177m for the same period last year.

Loubser denied this was an indication the JSE was letting costs slide.

“These were once-off costs, R29m as a result of our black empowerment deal and R6m from a staff … scheme.”

(Business Day)

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