JPMorgan, Goldman, Deutsche see more listing activity on JSE in 2024
TLDR
- Johannesburg Stock Exchange (JSE) experiencing an IPO resurgence driven by factors like potential interest rate cuts and upcoming elections.
- Major global banks like JP Morgan, Goldman Sachs, and Deutsche Bank showing renewed interest in JSE IPOs.
- Companies looking to unlock value through unbundling and improving balance sheets, reflecting a strategic business optimization approach.
After a period marked by a wave of delistings, Africa's largest stock exchange, the Johannesburg Stock Exchange (JSE), is showing signs of a revival in initial public offerings (IPOs), according to major global banks like JP Morgan, Goldman Sachs, and Deutsche Bank. Factors contributing to this resurgence include potential interest rate cuts, South Africa's upcoming elections, and plans to address persistent power outages.
Data compiled by Bloomberg indicates that the JSE witnessed only two IPOs last year. However, JP Morgan reported an uptick in companies preparing to go public in Johannesburg, indicating renewed interest from investors. Goldman Sachs' South Africa CEO, Simon Denny, highlighted the significance of foreign capital closely monitoring the 2024 elections.
Meanwhile, Deutsche Bank's Investment Banking Advisory and Origination Director, Stephen Nyakudarika, noted that conglomerates are seeking to unlock value from profitable subsidiaries through unbundling, raising capital, and improving their balance sheets. This trend reflects a strategic move to capitalize on market opportunities and optimize business performance in the evolving economic landscape.
Key Takeaways
The JSE saw a stark contrast between IPO and delisting trends in 2023, with only two IPOs but 11 delistings, as per Bloomberg data. However, the pace of delistings seems to be slowing in 2024, with only two recorded so far. JSE CEO Leila Fourie is optimistic about the year ahead, forecasting as many as 10 listings in 2024. This shift comes amid a more positive outlook for South Africa's economy, which has struggled with underconfidence in its recovery. Inflation is showing signs of easing, and growth expectations have doubled, albeit from a subdued starting point. Additionally, the nation's efforts to address chronic power shortages are expected to bear fruit within the next two years. These developments suggest a renewed sense of optimism in South Africa's economic trajectory, potentially buoying investor sentiment and driving activity on the JSE.
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