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JSE's Newton-King: Mining Is No Longer Only Opportunity (Audio) · Bloomberg Intelligence

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  Speaker 1: Global business news twenty four hours a day. It's Bloomberg
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  Speaker 1: This is a Bloomberg Business Flash. Charm Bloomberg World Handquarters.
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  Speaker 1: I'm Charlie Pellett. Stocks are rallying ahead of the final
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  Speaker 1: hour of trading on this Wednesday, SMP five hundred index
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  Speaker 1: eleven points to sixty one, that is a gain of
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  Speaker 1: five tenths of one percent down. Industrial is up one
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  Speaker 1: d twenty nine points, up seven tenths of one percent.
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  Speaker 1: Nav stack is up thirty three points, a gain of
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  Speaker 1: six tents of one percent. Tenure down nine thirty seconds
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  Speaker 1: the old one point seven two percent, Gold down sixty cents,
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  Speaker 1: the ounce to twelve sixty nine. Crude Oil West Texas
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  Speaker 1: Intermediate up two point one percent, gaining a dollar three
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  Speaker 1: of arrel forty nine seventy one. Right now on w
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  Speaker 1: T I, I'm Charlie Pellett. That's a Bloomberg Business Flash.
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  Speaker 1: You're listening to Taking Stock with Kathleen Knaves and Pim
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  Speaker 1: Fox on Bloomberg Radio the Johannesburg Stock Exchange. It's the
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  Speaker 1: biggest in Africa, the twentieth largest in the world, with
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  Speaker 1: over three hundred thirty companies listed on the primary exchange,
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  Speaker 1: representing an average market cap of one point four excuse me,
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  Speaker 1: one point over four billion US dollars, with some companies
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  Speaker 1: containing a market cap of over one trillion US dollars.
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  Speaker 1: And we're very happy to welcome the CEO of Johannesbrook
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  Speaker 1: Stock Exchange, the j s C, Nicki Newton King. She
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  Speaker 1: is in town this week for the fourth annual South
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  Speaker 1: Africa Tomorrow Investor Conference. The j s C is one
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  Speaker 1: of the coast sponsors. Nicki Newton King, Welcome to Bloomberg Radio.
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  Speaker 1: Thank you for having me, so tell us a little
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  Speaker 1: bit more about the j s the Johannesburg Stock Exchange
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  Speaker 1: and your role there. You've been in this industry for
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  Speaker 1: many years. I've been in there at the stock exchange
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  Speaker 1: itself for twenty years, if you can believe it. The
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  Speaker 1: state of the exchange is are essentially a one stop shop.
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  Speaker 1: It's completely horizontally and vertically integrated. Means we trade, we list,
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  Speaker 1: we trade, we clear, we settle equities, bonds, financial derivatives, commodities.
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  Speaker 1: Really it's the place you come to if you want
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  Speaker 1: to buy South Africa. Now, recently you said that we
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  Speaker 1: have to internalize the fact that the way we do
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  Speaker 1: things in this country, meaning South Africa, needs to change.
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  Speaker 1: What did you mean by that and give us a
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  Speaker 1: little context for people that have not been following what's
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  Speaker 1: going on with the South African economy and the political scene. Yeah,
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  Speaker 1: for sure, So we are. We have a very noisy democracy,
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  Speaker 1: and we have a very wide Geni coefficient, meaning that
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  Speaker 1: we have a very sophisticated business class and and but
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  Speaker 1: some very economically marginalized, a very deep economically marginalized sector
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  Speaker 1: of our of our society. And I think business needs
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  Speaker 1: to change the way it does business to recognize that
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  Speaker 1: just making money, just distributing that to shareholders just simply
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  Speaker 1: isn't a good enough way to do business in an
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  Speaker 1: emerging market like us. It's about how you reach out
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  Speaker 1: and make sure that the way you do business is
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  Speaker 1: more inclusive. As you grow, how do you grow inclusively? Well,
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  Speaker 1: there's a lot of that. That's a tough question, not
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  Speaker 1: only in South Africa, but a lot of places. So
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  Speaker 1: as you move ahead, how you how would you plan
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  Speaker 1: to tackle that? How does it affect your role? Well,
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  Speaker 1: it's very fascinating because the exchange is at the sort
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  Speaker 1: of center of the capital market system, and so we
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  Speaker 1: become a point for for the economically marginalized to talk
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  Speaker 1: to about how they wish to be included. I think
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  Speaker 1: the first party is listening, the second party is engaging
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  Speaker 1: the listed companies about how do you actually look at
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  Speaker 1: your labor relations, how do you look at how you
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  Speaker 1: price what are your additional responsibilities in a country like US,
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  Speaker 1: for instance, in relation to education, in relation to housing,
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  Speaker 1: relation to health. It's a far broader, more sustainable way
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  Speaker 1: of looking at business than perhaps one traditional looking at
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  Speaker 1: in in some of the bigger capitalist markets. Tell us
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  Speaker 1: a little bit about the effects of interest rate changes
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  Speaker 1: in the United States on an economy such as that
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  Speaker 1: in South Africa, for sure. I mean everybody looks at
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  Speaker 1: what's happening in the US FED and as soon as
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  Speaker 1: the interest rates increase in America, emerging markets come under pressure.
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  Speaker 1: So we are an extremely open, extremely well regulated, very
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  Speaker 1: transparent emerging market that stacks up well from a capital
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  Speaker 1: market perspective. So international investors look at South Africa and
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  Speaker 1: say I can bring money in and take it out
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  Speaker 1: at any given time. The US rates start to increase,
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  Speaker 1: I think the US starts to US investors start to withdraw.
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  Speaker 1: South Africa thirty percent of our market any given days
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  Speaker 1: foreign So it matters what's happening in the States. Yeah,
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  Speaker 1: you know, South Africa. I guess this is considered an
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  Speaker 1: emerging market. In what way? Is it emerging still? But
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  Speaker 1: in what sense? The South Africa gained its economy and
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  Speaker 1: it's it's companies a status that to me, it seems
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  Speaker 1: very very developed, very deep, but emerging, anything but emerging.
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  Speaker 1: It's it's emerging in the sense of the GENII coefficient,
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  Speaker 1: in the sense that as a as an economy, the
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  Speaker 1: size of an economic sophistication broadly speaking of the economy
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  Speaker 1: looks more advanced emerging really than than frontier emerging. But
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  Speaker 1: the structure of the really most sophisticated parts, like the
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  Speaker 1: financial markets is absolutely world class. So, as an example,
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  Speaker 1: the exchange five years in her own rated number one
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  Speaker 1: in the world by the World Economic Forum for the
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  Speaker 1: sophistication of the regulation in exchange space. So that's right
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  Speaker 1: at the very pointy end of sophistication. And so we
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  Speaker 1: pride ourselves to South Africans in being able to offer
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  Speaker 1: investors world class investment environment, but an emerging market investment case. Now,
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  Speaker 1: you've had a lot of political turmoil. You referenced this,
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  Speaker 1: and I'm wondering if you could just offer people a
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  Speaker 1: little bit of detail. There are reports that the current
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  Speaker 1: Finance minister is being probed by police and maybe arrest.
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  Speaker 1: You've had the Reserve Bank governor say that South Africa's
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  Speaker 1: rand is currently under valued and that the fluctuations in
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  Speaker 1: the rand are partly because of political issues. So we're
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  Speaker 1: a noisy democracy, but we are a democracy and we've
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  Speaker 1: just had a very noisy local government elections where there's
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  Speaker 1: been significant transfers of power from the ruling party to
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  Speaker 1: to the opposition, all peacefully achieved. So that noisy democracy
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  Speaker 1: brings with it storms for investors to navigate through. The
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  Speaker 1: Finance minister has been under pressure as there has been
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  Speaker 1: suggestions about potential charges against them, but those were confirmed
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  Speaker 1: to be going nowhere this this week. I think one's
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  Speaker 1: got to recognize there's institutional strength. They're far deeper than
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  Speaker 1: just the Minister of Finance. So how about the existing
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  Speaker 1: opportunities for investors in South Africa right now, what investors
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  Speaker 1: tell us International investors tell us world clast management teams
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  Speaker 1: across a range of sectors, very deep financial markets, very
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  Speaker 1: well established, well capitalized banks, very deep um UH institutions. Oh,
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  Speaker 1: it's specifically industrial related companies. Mining a little bit more
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  Speaker 1: under pressure. Of course, mining people think is our anchor
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  Speaker 1: investment case, but it's no longer the big, the big
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  Speaker 1: investment part of South Africa. As the size of the
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  Speaker 1: financial services environment in the five and and the size
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  Speaker 1: of of other broad based industrial companies have grown, has
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  Speaker 1: the mining sector in in South Africa? I mean, has
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  Speaker 1: this been effected not only by competition, but the ray
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  Speaker 1: Hunt has dropped significantly in value against the I think
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  Speaker 1: it's done about eighteen percent so far this year. The
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  Speaker 1: mining industry is under pressure at the moment. And of
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  Speaker 1: course you've also had historically in the last two years
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  Speaker 1: quite a lot of labor unrest in the mining space.
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  Speaker 1: That's significantly calmed in the last year. So hopefully as
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  Speaker 1: commodity prices recover, mining will find its space. So is
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  Speaker 1: it unusual for a woman in South Africa to become
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  Speaker 1: the CEO of the stock exchange the largest on the continent,
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  Speaker 1: the twenty largist in the world. Well, it's uh and
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  Speaker 1: the first female CEO of the Stock Exchange. But when
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  Speaker 1: I was appointed, the head of the Reserve Bank was
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  Speaker 1: a woman. The head of one of our biggest big
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  Speaker 1: four banks was a woman. There are a lot of
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  Speaker 1: senior women in South Africa. We really pride diversity at
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  Speaker 1: the core of what we do in South Africa because
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  Speaker 1: diversity is a competitive advantage. You need people who think
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  Speaker 1: differently round a table when you're looking at really complex problems.
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  Speaker 1: So it's something I've been very proud to lead. It
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  Speaker 1: is unusual globally. It's not unprecedented, but it is unusual globally.
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  Speaker 1: Was it ever thus in South Africa? No, Well, I mean,
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  Speaker 1: you know, I think we're beginning to see more and
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  Speaker 1: more more women and and hopefully they'll be more following me.
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  Speaker 1: Are there any plans to change policies at the Johannesburg
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  Speaker 1: Stock Exchange in order to solicit more foreign investment. We
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  Speaker 1: rarely pride ourselves from an exchange perspective of being very
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  Speaker 1: open to attracting in specifically top international companies listing on
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  Speaker 1: in South Africa. As an example, a b in bev,
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  Speaker 1: the world's largest brewer, took twenty seven days from the
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  Speaker 1: time that they spoke to us the first time to
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  Speaker 1: the time that they were listed. They said, of their
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  Speaker 1: four global listings, it was the most constructive world class
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  Speaker 1: listings process they've ever had. From an investor perspective, we
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  Speaker 1: only hear complementary things from investors. But in my mind,
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  Speaker 1: if investors need us to to shop and that what
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  Speaker 1: we do, then we're always open. Because you're publicly traded,
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  Speaker 1: publicly traded company for sure, and that's I think a
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  Speaker 1: good thing for an exchange to actually live part of
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  Speaker 1: its own business model, don't you think so? In terms
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  Speaker 1: of some of the upcoming what's the next South Africa?
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  Speaker 1: What are the next big companies? I think technology, for example,
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  Speaker 1: there's in many parts of Africa the continent now they're
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  Speaker 1: they're tech startups of all shapes and sizes. What's what's
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  Speaker 1: what's really interesting right now in South Africa and what's
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  Speaker 1: interesting in South Africa is to start to see the
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  Speaker 1: real big South African entrepreneurs look to use their South
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  Speaker 1: African base as a platform for expanding on the continent.
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  Speaker 1: They become a proxy for the African story and that's
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  Speaker 1: going to be a good news for the for for
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  Speaker 1: investors through the j C because they can use a
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  Speaker 1: world class environment to access the African story, the commodity story.
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  Speaker 1: Just last word to you. I mean, because we talked
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  Speaker 1: a little bit about gold, but there's also a lot
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  Speaker 1: of thermal call for example in South Africa, there is
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  Speaker 1: a there are a lot of different commodities. But the
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  Speaker 1: commodity space and is a is a pretty difficult space
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  Speaker 1: to actually to to actually deeply innovate in, especially in
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  Speaker 1: the labor with the labor space, so we have we
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  Speaker 1: are going to have to work quite hard to unlock
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  Speaker 1: and ride that commodities wave. I think I want to
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  Speaker 1: thank you very much for coming in and spending time
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  Speaker 1: with us. The chief executive of the Johannesburg Stock Exchange,
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  Speaker 1: Nikki Newton King the johannes Stock Exchange up twenty seven
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  Speaker 1: and a half percent so far this year. You're listening
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  Speaker 1: to take King Stock. I'm pim Fox, my co host
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  Speaker 1: Kathleen Hayes, and this is Bloomberg. Yeah,