Retirement funds in South Africa threatened by a shrinking JSE
There have been several delisting's on the JSE over the past couple of years and these could threaten South Africans retirement funds.
The number of listed companies on the JSE has halved over the last two decades from approximately 470 to 287 and this trend is expected to get worse.
In 2022 there were 20 companies that were delisted.
In 2022, AmaranthCX rang the warning bells for a string of delisting's from the JSE.
In 2022, South Africa had 332 companies listed on the JSE and three other stock exchanges, as reported by the company.
The JSE and other exchanges delisted 18 companies during the first half of 2022.
The stock exchange is removing or may soon remove fourteen more companies. They are going through the formal process or facing actions that could lead to their removal.
An AmaranthCX's study showed that around 32 or more companies will leave South African stock exchanges this year.
Less companies for asset managers to invest in for retirement funds and their members exist.
Most members investing in retirement funds who rely on the broker will ultimately leave it to the "strategy" chosen by the broken managing the portfolio. These brokers will base the strategy what is allowed by law, in order to influence their decision making of where to invest.
Investors without a strategy could therefore look at the allowance to invest retirement funds. This allowance is up to 75% that can be invested locally and offshore into listed stocks.
Therefore, retirement funds hold most retirement money as high equity multi-asset class funds.
There are now fewer stocks to invest in and therefore fewer options for asset managers and this poses a liquidity risk for investors.
It would be a good idea to consult your asset manager to ensure you have a strategy in place to mitigate the shrinking stock options.
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