Dual-listed firms left untouched

Johannesburg  - South Africa will not limit local investment in its five dual-listed firms, including BHP Billiton and Anglo American, even if it caps investment on other foreign domiciled companies in the future.

The statement from the National Treasury on Wednesday could be a boon for the Johannesburg Stock Exchange's so-called London Five firms, which have their primary listings in London.

While BHP Billiton [JSE:BIL], Anglo American [JSE:AGL], SABMiller JSE:SAB] and Investec (INP) have their main listing in London, they have been seen by South African regulators as domestic firms, meaning local investors are not subject to limits on their holdings.

The National Treasury is finalising regulation on how much foreign exposure it will allow institutional investors in order to limit volatile capital flows and contagion from international crises.

It said in a statement on Wednesday the classification of dual-listed firms as domestic assets "weakens the framework" for regulation of foreign exposure.

That likely means the Treasury could limit how much local investors buy of other companies that pursue a secondary listing in Johannesburg in the future, some analysts said.

That will not change, even if regulation on future dual-listing does, the Treasury said. Traders said this removed uncertainty about how regulators would deal with the five companies.

"I do think long-term it's positive," said Devin Schutte, a trader at Newstrading in Johannesburg.

The move is also a likely positive for the JSE Ltd, which operates the Johannesburg exchange.

"It's very important that the London Five continue to be treated as domestic and we're delighted that Treasury is doing that," said Nicky Newton-King, the JSE's deputy CEO.

In 2010 alone the five companies represented nearly a quarter of the total value traded on the JSE.