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There is a common belief that the fortunes of the JSE, the listed operator of the Johannesburg Stock Exchange is linked to the actual performance of the stock market.
In today's blog we compare the movements of the JSE share price to that of the JSE ALL Share Index levels and investigate whether it holds true that the performance of the JSE as a listed company is tied to the fortunes of the performance of the All Share Index. |
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JSE (JSE) share price performance vs JSE ALSI (J203) index performance
The interactive graphic shows the share price performance of the JSE over the last 5 years. As soon as users click on the JSE ALL Share Index (top left of the graphic), the graphic shows the percentage return for both the JSE and the JSE All Share Index for the time period selected by the user. Users can supply their own dates into the graphic and it will recalculate the returns of both the JSE and the JSE All Share Index, or users can select the pre created zoom boxes:
1 Month: Shows the last month's returns
1 Year: Shows the last year's returns
YTD: Shows the returns of the Year to Date (YTD): So from the start of the current year
MAX: Shows the returns over the last 5 years.
1 Month: Shows the last month's returns
1 Year: Shows the last year's returns
YTD: Shows the returns of the Year to Date (YTD): So from the start of the current year
MAX: Shows the returns over the last 5 years.
Now readers would notice that the returns achieved by the two series are vastly different, and does not look highly correlated, showing that the fortunes of the JSE as a listed company is not directly linked to the performance of the JSE All Share Index.
So why is the performance of the JSE not directly linked to the performance of the JSE All Share Index? Well its called diversification. The JSE as a company would not like their earnings to be dependent on market movements, but rather on market participation. I.e the JSE looks to make money based on the number of trades that take place, be it while the market is increasing, or declining.
And because of this the JSE actually has a wide variety of income streams based on the types of products and services they offer. Below a summary of the returns earned by the JSE by their various income streams.
Capital markets (R1.056billion or 50.3% of JSE revenues)
Equity market fees R506 692 000 (24.1%)
Equity derivatives fees R169 769 000 (8.08%)
Currency derivatives fees R47 943 000 (2.3%)
Interest rate market fees R62 907 000 (2.99%)
Commodity derivatives fees R68 365 000 (3.25%)
Primary market fees R181 005 000 (8.62%)
Colocation fees R20 068 000 (0.96%)
Post-trade services (R772.4million or 36.8% of JSE revenues)
Clearing and settlement fees R383 794 000 (18.3%)
Back-office services (BDA) R 292 911 000 (13.9%)
Funds under management R95 737 000 (4.6%)
Information services
Index fees R50 021 000 (2.4%)
Market data fees R221 702 000 (10.6%)
And because of this the JSE actually has a wide variety of income streams based on the types of products and services they offer. Below a summary of the returns earned by the JSE by their various income streams.
Capital markets (R1.056billion or 50.3% of JSE revenues)
Equity market fees R506 692 000 (24.1%)
Equity derivatives fees R169 769 000 (8.08%)
Currency derivatives fees R47 943 000 (2.3%)
Interest rate market fees R62 907 000 (2.99%)
Commodity derivatives fees R68 365 000 (3.25%)
Primary market fees R181 005 000 (8.62%)
Colocation fees R20 068 000 (0.96%)
Post-trade services (R772.4million or 36.8% of JSE revenues)
Clearing and settlement fees R383 794 000 (18.3%)
Back-office services (BDA) R 292 911 000 (13.9%)
Funds under management R95 737 000 (4.6%)
Information services
Index fees R50 021 000 (2.4%)
Market data fees R221 702 000 (10.6%)
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