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Johannesburg - The JSE alliance with six stock exchanges in the Brics countries strengthens South Africans position within the group.
Last week, at the annual general meeting of the World Federation of Exchanges in Sandtonnes, the JSE announced that it and the other exchanges would in future work more closely to give investors greater access to emerging markets.
Every exchange would soon make available derivative instruments that track the leading indices of the others.
Ron Acrulli, who chairs the global federation and the Hong Kong Stock Exchange, described the partnership as a historic moment for Brics (Brazil, Russia, India, China and South Africa).
"The alliance points to the increasing relevance of Brics economies and financial markets in the decade ahead, underscoring the reason for the Brics relationship."
The chief executives entering into the agreement said the similar experiences and challenges facing their exchanges make the partnership a logical decision.
South Africa's place within Brics has been questioned from an economic vantage point, but the JSE compares favourably with other Brics exchanges in terms of market capitalisation.
Acrulli told Sake24 that the JSE is more developed than certain other exchanges within the alliance, as the South African exchange is much older.
He said that over the past 10 years the Brics countries have made incredible progress and more and more investors therefore want access to these markets.
“For an economy to develop it needs a healthy financial market and the Brics financial markets have made great advances in the past couple of years.”
He said the volatility in global markets was something that emerging markets could not escape, especially as the crisis affects the banking sector.
“Globally, banks do business across the globe and we in Hong Kong cannot consider ourselves immune from the crisis. The business they do here is also affected.”
Acrulli reckons the reason why foreigners had recently sold off their emerging market shares was, rather, related largely to liquidity problems.
“If you know that you have debt that needs to be settled soon but you have insufficient cash, the only way to get the cash is to sell assets you previously bought.”
Acrulli said Asia and Hong Kong in particular had been less affected than Western countries by the 2008 financial crisis. But Asia was keeping a keen eye on the situation in Europe.
“We are worried, firstly because the European authorities have taken so long to come up with a solution.”
He said the protracted way in which the crisis was being handled increased the uncertainty.
Hearing, for instance, that Slovakia still had to vote on extending the European rescue fund would lead to misgivings. Such uncertainty would not foster investor confidence.
He said uncertainty affects not only financial markets, but businesses as well.
It impacts confidence among small, medium and micro enterprises, which are needed for growth and job creation. All are nervous - and they cannot be blamed for it.
Acrulli considers it unrealistic to expect that China can save the world from the crisis.
- Sake24
For more business news in Afrikaans, go to Sake24.com.
