How do we kickstart investment research for the South African equity market?
As a consulting team focused on assisting businesses communicate with their stakeholders, this is a question that we spend a lot of time considering. Whether it is through financial PR, Investor Communications or development of Owned, Earned and Bought media strategies, we are constantly challenging ourselves to identify ways in which we can develop a more vibrant equity market.
Why equity research is important in the South African context
At one point in time, the JSE was arguably the best performing stockmarket across the globe and had brought a variety of innovative businesses to the market. These included the likes of SAB (SAB Miller), Anglo American, De Beers, Naspers, Investec, Capitec and others.
In 1994, when South Africa returned to the international investment community, the future was bright as global investors sought access to one of the most exciting frontier markets supported by world class financial services infrastructure.
Fast-forward to 2025 and the JSE sits with around 280 listed businesses and less than 10% of these are covered by rated analysts at any point in time. In line with a broader global de-listings trend, the JSE has continued to shrink and failed to attract new listings. With changes in global regulations around research, many of the big banks have pulled back their coverage of South African equities.
Similarly, the Cape Town Stock Exchange (CTSE) – which was established to try and create an alternative route to market for less mature businesses – has struggled to offer a compelling value proposition. A major challenge here is the lack of a broker network through which they can engage potential investors, and the result is depressed investment multiples.
The development of secondary markets where investors are able to trade their shares or exit early-stage investments in a transparent manner is critical for attracting investors into earlier stage investments including Venture Capital and Angel investing.
This situation has been exacerbated through the decline in traditional business media assets with many newsrooms under enormous financial pressure as their business models struggle to evolve.
Unless businesses are prepared to invest heavily in their Investor Communications and stakeholder engagement activities, founders will struggle to realise the true value of their businesses on exit.
For those interested in the topic, our CEO Marc Ashton recently wrote a column for the Daily Maverick on the topic.
What does Keith McLachlan have to say?
Our CEO Marc Ashton recently interviewed Keith McLachlan – CEO of Element Investment Managers – and they discussed the challenges currently faced by listed businesses in the South African market.
In this interview, Keith and Marc discuss:
- The state of equity research in South Africa
- The pros and cons of “paid-for” research
- Businesses who are doing investor communications well
Our contribution to supporting equity research
As a business, we want to see a thriving investor ecosystem in South Africa. At its core, any South African who has a pension fund or exposure to the equity market will be richer if we attract capital.
At the same time, want to see entrepreneurs starting businesses because they believe they can build wealth and we want to read the success stories of local innovators backed by venture capital and being acquired by international investors.
These activities help with capital formation and making more capital available for investment in new projects and infrastructure.
We have a commitment to try and stimulate the local ecosystem by hosting discussions on these subjects. If you are a listed small or medium cap business or a VC fund looking to share a success story – let’s chat.
We host our Meet The Management video and podcast series specifically to let people heare about the stories that don’t make it into the traditional business media.
Looking to ramp up your investor communications or financial PR strategies?
We would love to collaborate with you to help develop a high-quality B2B communications strategy which allows you to engage your stakeholders in a meaningful manner.
Our team comprises a variety of experienced people including our CEO (experienced financial journalist and former editor of Finweek and MD of Moneyweb), award-winning designers and strategists and copywriters who have developed content for experts across a variety of fields including banks, asset managers, law firms and international consulting agencies.
Our contact details are here.