JSE welcomes the indication in the Medium Term Budget Policy Statement

October 25, 2011 at 9:55 AM EDT

The Johannesburg Stock Exchange (JSE) welcomes the indication in the Medium Term Budget Policy Statement

25 October 2011: The Johannesburg Stock Exchange (JSE) welcomes the indication in the Medium Term Budget Policy Statement that local investors will be able to trade in foreign domiciled companies where they were previously restricted by prudential limits and that the exchange will be able to include these companies in domestic indices.

Aiming to improve South Africa’s position as a financial gateway into Africa and facilitate cross-border transactions, National Treasury has decided that “inward-listed shares on the JSE will ... be classified as domestic assets and be included on the JSE indices, as agreed with the regulatory authorities. Steps will be taken to simplify procedures and reduce the cost of cross-border money remittances, particularly to neighbouring countries and the rest of Africa”.

In the past, the JSE could not include foreign companies in the exchange’s indices, as local investors weren’t able to buy the shares without restriction. This in turn limited the amount of local activity in the foreign companies and hence limited the JSE's ability to position itself as an investment destination. Once effect has been given to today’s policy direction, South African asset managers will be able to invest more freely in these companies, using the JSE to do so.

“We very much appreciate the thoughtful and careful manner in which National Treasury and the Financial Services Board have engaged on this issue, which clearly has an important impact on the markets, says JSE CEO Russell Loubser. “The positive move provides a further boost for the reputation of the country’s markets, by enabling the JSE to more aggressively pursue a wider range of investment possibilities. It will take time to work through the practical steps to implement this and we will make an announcement in due course.”