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22 CCOOLULUMMNNSS||IaAnnTthoeamGsoarndner South Africa makes up
less than 1% of Global GDP, has one of the highest Gini co-efficients in the world, one of the lowest savings rates and yet one of the best banking system and stock market; certainly the largest stock market on the African continent by market capitalisation and volume traded.
With a total market capitalisation of US$1 trillion, the Johannesburg Stock Exchange (JSE) is signi cantly more liquid than the
next biggest exchange on the continent. On average $1.6 billion worth of shares changes hands daily. The exchange’s benchmark index is the FTSE All Share index, which is made
up of 176 constituents. Since the start of measurement, July 1995, to the end of June 2017 the index has returned 958% in South African rand, but 194% in US dollars. In the same period, the South African rand has devalued over 300% from 3.55 against the dollar to closer to 13 against the greenback.
One of the big negatives of the FTSE All Share is that one share, Naspers Ltd, makes up 17% of this index. As recently as 2003, the Shareholder Weighted Index (Swix) was introduced as an improved benchmark
for funds, particularly pension funds, to utilise. Key factors that determine whether an index will make a good benchmark are;
transparency, liquidity and diversi cation,
or to put a  ner point on it, minimal concentration risk. However, due to the Naspers share’s substantial rise, thanks in no small part to its 34% stake in Chinese online retailer Tencent, by mid-2017 the weight of Naspers in the Swix had grown to 21%.
But this is, by far, not the biggest issue
in the South African  nancial sector. The exclusion of millions from this segment of
the economy poses a material threat to South Africa’s national objective of inclusive growth. Despite the healthy liquidity, depth of market and there being over 1,500 Collective Investment Schemes (unit trusts) registered in the country, according to the JSE  nancial reports there are only approximately 300,000 unique, direct, shareholder accounts; and retail trading makes up approximately 0.5% of the daily traded volume on the JSE.
Government has attempted to correct
a number of imbalances in the  nancial sector. Firstly, by implementing the Financial Sector Charter, which prescribes rules for ownership, employment, procurement and training in the sector. The charter falls under the wider Broad-Based Black Economic Empowerment (BBBEE) act of 2003. It’s aims were to encourage inclusive growth and black participation in the  nancial sector.
However, measures of success of the charter are not apparent. The Treasury is quoted
as saying that overall  nancial inclusion improved from 55% in 2005 to 85% in 2016
– the tangible criteria being that most adults

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