- Over four years, challenger stock exchange A2X has grown its value to R5 trillion.
- A year ago, it was worth R2.2 trillion, but the introduction of heavyweight companies has bolstered the exchange.
- In September, trading volumes reached a record high, surpassing their previous record five times.
In just four years, alternative stock exchange A2X managed to clinch the title of Africa’s second-biggest exchange after growing its market cap to almost R5 trillion, just a year ago, it was valued at R2 trillion.
When A2X debuted in October 2017, it positioned itself to directly compete with South Africa’s main Johannesburg Stock Exchange (JSE) by offering an alternative platform for companies to have second listings where their shares could be traded.
It hit the ground running, launching with three listings from leading companies in the financial services sector, such as Coronation Fund Managers, which had assets under management (AUM) of R614 billion at the time. It also had African Rainbow Capital, and Peregrine Holdings.
Kevin Brady, CEO of A2X, said some of its success stems from having operationalised some brokers who could trade more effectively and seamlessly across markets.
In September, it reached record trading levels with a daily average of 200 million.
“It was five times our previous record,” Brady said.
“We did just short of R4 billion worth of trade. A lot of that trade came through from many of the big issuers in South Africa.”
He also attributed the exchange’s success to the quality of its listed companies and said it encouraged other companies to consider a second listing on A2X more seriously.
The exchange is now 56 listings strong, with 12 of those featuring on the JSE’s top 40 companies. The latest JSE top 40 company to join the bourse was Investec.
It got a significant boost South Africa’s biggest JSE company, Naspers, which started trading its shares in 2018. A year later, global tech giant Prosus listed on the exchange. Other big names include Sanlam, Mr Price, the only retailer, Ascendis, and Famous Brands.
While the company has decent representation across most industries, bringing on mining companies, in particular, has been challenging, Brady told Business Insider South Africa.
“The one [sector] we’re underrepresented [in] most is the mining sector, particularly with the resource cycle; we’ve missed the big mining houses and the activity that takes place whether its platinum, iron, or gold,” said Brady.
“We do have African Rainbow Minerals, but we don’t have a solid representation in that area, and we are working with a number of the companies,” he said.
One of the biggest challenges in luring companies to list on the exchange has been that some companies are seemingly miseducated about how multi-listings work, he said.
“There’s a perception that exchanges come with a lot of costs and regulation; it’s not true with regards to secondary listing. [It] makes it surprisingly difficult,” said Brady.
Since coming into the market, it’s created savings to the tune of R400 million.
Its model is based on offering savings in the form of exchange cost savings and price improvement savings.
“This time last year, the direct and indirect annual savings available to the market were about R200 million. As more and more companies and exchange-traded products have listed on A2X in the past year, this number has doubled,” said Brady.
The company plans to acquire a licence that will allow it to offer inward listings, allowing companies with primary listings offshore to have a listing on A2X. It also plans to work with other alternative exchanges to have their companies secondary list on A2X.
