JSE, a mine of investment opportunities?

Agenda

Overview of the JSE

More our SA capital and financial market

Focus on Africa

Regulatory changes

Market performance

Listing requirements

Conclusion

Overview of the JSE: Where we are

www.jse.co.za

South Africa – relative to other BRICS

0100020003000400050006000700080009000

0 500 1000 1500 2000 2500 3000 3500 4000

GDP $ billion

Market cap $billion

Hong Kong

BrazilIndia

China

Russia

South Africa

0

10

20

30

40

50

60

70

0 5 10 15 20 25 30

Gini Index

Unemployment rate %

South Africa

China

RussiaIndia

Brazil

Source: World Bank

Largest Exchange in the

World byMarket Cap

19th

The Johannesburg Stock Exchange

Licensedunder the Securities ServicesAct 2004

Two boardsfor listing –Main Board

and AltX

Member ofthe World

Federation of Exchanges since 1964

Largest Bond Market by value

tradedin 2012

4th

In Regulation Securities Exchanges

1st

Overview of the JSE

1Strength of auditing and

reporting standards1Efficacy of corporate

boards

2Availability of financial

services

2Financing through

local Equity markets

3Soundness of Bank

1Regulation of

securities exchanges

1Financial market legal

rights development

The J

SE in

a gl

obal

cont

ext The World Economic Forum’s annual World Competitiveness

report showcases the world-leading position of theJSE as a financial market and South Africa as

capital market destination

1Protection of minority

shareholders

World Economic Forum, Global Competitiveness Index 2013 - 2014

Total Countries 148

Australia Canada China South AfricaUnited

Kingdom United StatesStrength of auditing and reporting standards 14 9 80 1 16 36

Protection of minority shareholder's interests 24 16 75 1 15 27

Financing through the local equity market 8 15 38 2 12 6

Soundness of banks 9 1 72 3 106 58

Regulation of securities exchanges 11 16 63 1 24 30

Legal rights index 1 42 65 1 1 12

BRICS opportunities

MOU signed by participating BRICS exchanges

• Resulted in a joint initiative to expose investors to the BRICS economies, through cross-listing products - BRICSmart

• The Initial, 1st phase offering, now gives investors access to derivatives on Brazil’s IBOVESPA, Russia’s MICEX Index, India’s SENSEX Index, China’s Hang Seng and Hang Seng China Enterprises Indices and South Africa’s FTSE/JSE Top40 Index

• Apart from cross-listing products, other opportunities will be explored to promote greater development and understanding amongst the respective markets

OVERVIEW

FTSE/JSE Index performance

FTSE/JSE All Share Index: major stock market index which tracks the performance of 160 companies listed on the Johannesburg Stock Exchange in South Africa.

23 Jan: The JSE All Share Index closed at a record high for the third time‚ underpinned by a rise in platinum‚ resources and gold mining stocks.

Anglo American gained 2.79% to R252,34.Sasol closed at a record high of R557,97. Kumba Iron Ore leapt 3.62% to R458 andArcelorMittal jumped 4.61% to R40.82.Top 40: up 107% (40687.2 points) Mid cap: up 113% (57146.8 points)Small cap: up 113% (48789.17 points)Fledgling: up 90% (6373.8 points)

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

140%

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

%

Indices performance (Jan 2009 - 30 Jan 2014)

Top 40 Mid Cap Small Cap Fledgling

JSE Broader Africa Focus

JSE on the continent

-100.0%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0 50 100 150 200 250 300 350 400 450

Liqu

idity

# of listed companies

December 2013

JSEEGX

Nigeria

Ghana

Kenya

SEMBSE

Namibia

Uganda

Fundamental changes in the regulation creates opportunities

Medium term budget policyOctober 2011

“The National Treasury has announced that local investors will nowbe able to trade in foreign domiciled companies listed on the JSE,boosting the status of South Africa’s bourse as a springboard forforeign companies to expand into Africa”

Benefits for investors

• SA investors are not limited to invest in only South African companies but also foreign companies listed on the JSE

• The JSE’s regulatory standards and governance requirements my provide comfort to investors

Fundamental changes in the regulation creates opportunities

Budget SpeechReview 2013

National Treasury announced their support for South African companies that want to expand into the rest ofAfrica and offshore. Each Johannesburg Stock Exchange listed entity will be entitled to establish one subsidiaryto hold African and offshore operations (HoldCo), which will not be subject to foreign exchange restrictions. Thiswill incentivise companies to manage their African and offshore operations from South Africa, maximising thebenefits to South Africa’s economy. Transfers from the parent company to HoldCo will be allowed up to R750million per hear. Additional amounts may be considered on application to the Reserve Bank.

Benefits to South African and African companies• Listing allows for index inclusion• Capital raised on the JSE is freely transferable out of

South Africa• Diversity shareholder base and get access to new

sizeable pools of equity• South Africa has a large domestic investor pool (top

15 investors have FUM of more than USD500bn)• JSE is a major destination for global emerging market

funds

• South Africa holds a significant weighting in emerging markets and attracts a substantial amount of foreign investment

• Listed JSE shares may be used as transaction currency for future acquisitions

• Numerous listed peers, which will promote research coverage and investor interest

• JSE likely to provide greater liquidity South Africa is well banked, with a broader range of broker coverage by both international banks and local operations

Benefits of a Dual Listing

Capital Access

Deep pools of capital

Valuation

Appropriate for your company and its’ prospects

Company profile

Raised with increased analysis

Acquisition Scrip

For company transactions

Benchmarking

With comparable international companies

Investor Base

Diversified and incudes all assets of South African institutions

OVERVIEW

Dual listings on the JSE

Dual listed companies contribute 83% of the overall basic resources market capitalisation

30 – 40% on foreign trade on the JSE, SA investors looking at diversifying outside of South Africa

Raise money in South Africa for Africa .

17

9

11

6

7

4

6

0 5 10 15 20

LSE

Europe ex LSE

ASX

TSX

USA

Africa

Other

Mining dual listings

www.jse.co.za

Glencore XstrataCase Study

Listing13 Nov 2013 31 Dec 2013

Share Price– cps 5387 5481

Market Cap R714.5bn R727.8bn

High/Lowsince admission 5481/4999

Price Performance

4700480049005000510052005300540055005600

Share price performance since listing

Listed in 2013, closing price at R53.87 and market cap of R714.5billion

Glencore is the third- largest company on the JSE after BAT (1.1 trillion) and SAB Miller (887 billion)

The biggest company in the mining sector by market cap

OVERVIEW

Total capital raised on the JSE ( Equity & Debt )

386 companies listed of which 67 are basic resources (Mining and Industrial metals & mining)

36 of 67 companies are dual listed

Basic resources companies contribute 23% (R2.4 trillion) of the overall JSE market cap of R10.6 trillion.

In 2013, 19% of the trade on our debt market was conducted by foreign investors

14.539.0

64.2 83.8125.2

261.5

77

107 81

88

78

93

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

2008 2009 2010 2011 2012 2013ZA

R-_ B

illion

s

Capital raised

Corporate Bonds Equity capital

Total capital raised by mining companies

TOTAL

Debt capital raised down 11.4% year-on-year. As at the end of October 2013, the nominal value of the bond of the mining sector was R4.55 billion (0.3% of total). This amount comprised of 11 listings by 4 issuers

0.0 0.2 0.1 0.0

3.92.9

34.2

18.4

37.0

21.5

28.4

12.2

-

5

10

15

20

25

30

35

40

2008 2009 2010 2011 2012 2013

Billio

ns

Capital raised by mining companies

Debt Equity

Volume, # of deals and Value traded

273

562

788

879

765799 865

745

913

-

100

200

300

400

500

600

700

800

900

1,000

2005 2006 2007 2008 2009 2010 2011 2012 2013

ZAR

Billio

ns

Value traded- strong liquidity for mining issuers

-

2

4

6

8

10

12

-

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013

Tota

l dea

ls in

Milli

ons

Volu

me i

n Bi

llions

Volume & Deals for mining companies

Volume Deals

South Africa – Assets Under Management CIS, LISP, LTI

Source: ASISA

Collective investments total, R1,199,807,578,842

Long Term Insurance, R1,738,281,842,769

Lisp Total Sum of Assets, R 81 865 348 233

+ $4bn (R40bn) Hedge Fund industry

Listing Requirements

Exchange control and tax implications?

Initial Public Offerings (IPO)

- Application for Excon approval - Foreign business requires ( R) VOSTRO account- Capital deployed within 30 days

Tax Treatment

o Foreign domiciled company's tax residence status is not affected, provided that it has no business operations or activities within South Africa.

o Non-resident shareholder holding of JSE listed shares will not incur South African capital gains tax (CGT) unless:

• 80% of the market value of the shares at the time of disposal is attributable (directly or indirectly) to immovable property and;

• Non-resident shareholder holds at least 20% of the equity shares of the company.• Double taxation agreements are applicable where relevant.

Conclusion: JSE, a mine of investment opportunities?

• Investment case for South Africa?– Gateway for liquid investment in

the continent. – Well regulated market, SARB is

independent and monetary policy is clear and straightforward.

– No restrictions on foreign investors

• Mining part of South African DNA.

Thank you