How many tech firms appear on the JSE?

Sponsored by Jack Davies

Since its founding over 100 years ago, the Johannesburg Stock Exchange (JSE) has flown to the forefront of the global stock market. In 2022, it was in the top 20 stock exchanges globally by market capitalisation, and experts have high hopes for its continued growth.

Among its industries, particular sectors are beginning to shine. One of these is the tech sector, which is attracting attention from investors globally.

Tech in the JSE

Technology is a sector that’s been growing worldwide. The global pandemic has especially accelerated the transition to a more digital world as companies strived to maintain communication and working environments during the lockdown.

South Africa is no exception. The tech sector is an emerging industry in the JSE with some of the leading companies on the exchange having their roots in technology. Experts expect them to play a vital role in the growth of the exchange, and investors are favouring this industry despite a recent downturn.

Now is a good time to invest in JSE Top 40. The JSE All Technology Index, which tracks the performance of tech companies listed on the exchange, has risen by over 200% since its inception in 2018. This is compared to the JSE All Share Index which has only experienced a 50% rise over the same period.

There’s been a lot of speculation about both the cause and the future of this boom in the tech sector. Africa has been rapidly adopting more technology across the continent, such as the increasing popularity of mobile payment options. An increase in easy technological access is essential to equal economic opportunity.

Popular streaming services are being established in South Africa and e-commerce is on a rise. All this technology opens up new business opportunities. The country is currently witnessing growth in venture investment, which will bring even more companies to the JSE listings in the future.

Important players

Among the many companies listed on the JSE, some of the biggest players include Naspers and Prosus. Both Naspers and Prosus, two interlinked companies, are some of the largest technology investors globally and are climbing quickly on the JSE market.

Naspers, especially, has a large influence in South Africa. It currently has the highest market cap in the JSE at above R640bn. The company operates in technology and e-commerce, placing it at the forefront of the rapid adoption of modern technology in South Africa. Recently, Naspers has taken a step back to re-evaluate their business strategies both in South Africa and globally. While Naspers Foundry, a fund to assist national start-ups, has come to a close, they still intend to invest heavily in the development of tech start-ups and small companies within South Africa.

Recently, Naspers has sold shares in Tencent — a Chinese company that Naspers was previously the biggest shareholder in — in order to redirect the funds back into the South African economy. This could be a great move for the burgeoning tech sector in the JSE.

Prosus, a spin-off company of Naspers, has a similar focus, and their growths and values within the JSE align, despite Prosus operating more globally.

The mobile phone boom

Other leading technology companies include MTN Group and Vodacom. Both are telecommunications providers based in South Africa and operate across several African countries and the Middle East. Since the explosion of growth in mobile phone technology across the continent, which both played a large role in, access has increased to investment and trading. This has a two-fold effect on the JSE both increasing market growth for mobile phone companies and increasing investment access to the exchange itself.

Outside investment

Many large foreign companies also invest heavily in the South African tech sector. Facebook and Google both have investments in South African tech startups. Google, for example, invested around R70m in 60 start-ups across the continent, five of which are from South Africa. This stimulation of the economy, even from companies that don’t list on the JSE, will do wonders for the growth of the exchange.

Similarly, technological innovations from outside the country bring indirect growth. New developments in areas such as cloud computing, e-commerce and social media have led to the growth of the country itself.

This article is sponsored by Jack Davies.