Fewer stocks, bigger risks: JSE delistings impact investors

The Johannesburg Stock Exchange (JSE) has faced significant challenges over the years, particularly in the form of a shrinking number of listed companies.

- Keegan Marcia

From a peak of 669 listings in 1998, the JSE has seen a decline of over 50%, with fewer than 300 companies currently listed.

This reduction is attributed to increased regulatory costs, challenging economic conditions in South Africa, and strategic moves by companies to pursue delisting in favor of private equity opportunities.

The impact of these delistings is a more concentrated market, dominated by a few large companies, especially in sectors like commodities and tech, with major players like Naspers and Prosus holding significant weight.

This concentration poses a challenge for investors seeking diversification within the JSE. Relying solely on a limited number of stocks or sectors can increase exposure to specific risks, especially in a market facing economic headwinds.

As a result, diversifying into offshore markets has become increasingly important for investors looking to mitigate risks and enhance their portfolios.

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