WEBVTT - JSE's Newton-King: Mining Is No Longer Only Opportunity (Audio)

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<v Speaker 1>Global business news twenty four hours a day. It's Bloomberg

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<v Speaker 1>dot Com, the Radio plus Mobile Act and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash. Charm Bloomberg World Handquarters.

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<v Speaker 1>I'm Charlie Pellett. Stocks are rallying ahead of the final

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<v Speaker 1>hour of trading on this Wednesday, SMP five hundred index

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<v Speaker 1>snapping a two day drop after data showing acceleration in

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<v Speaker 1>the manufacturing and services sectors. SMP five hundred Index up

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<v Speaker 1>eleven points to sixty one, that is a gain of

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<v Speaker 1>five tenths of one percent down. Industrial is up one

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<v Speaker 1>d twenty nine points, up seven tenths of one percent.

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<v Speaker 1>Nav stack is up thirty three points, a gain of

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<v Speaker 1>six tents of one percent. Tenure down nine thirty seconds

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<v Speaker 1>the old one point seven two percent, Gold down sixty cents,

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<v Speaker 1>the ounce to twelve sixty nine. Crude Oil West Texas

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<v Speaker 1>Intermediate up two point one percent, gaining a dollar three

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<v Speaker 1>of arrel forty nine seventy one. Right now on w

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<v Speaker 1>T I, I'm Charlie Pellett. That's a Bloomberg Business Flash.

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<v Speaker 1>You're listening to Taking Stock with Kathleen Knaves and Pim

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<v Speaker 1>Fox on Bloomberg Radio the Johannesburg Stock Exchange. It's the

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<v Speaker 1>biggest in Africa, the twentieth largest in the world, with

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<v Speaker 1>over three hundred thirty companies listed on the primary exchange,

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<v Speaker 1>representing an average market cap of one point four excuse me,

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<v Speaker 1>one point over four billion US dollars, with some companies

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<v Speaker 1>containing a market cap of over one trillion US dollars.

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<v Speaker 1>And we're very happy to welcome the CEO of Johannesbrook

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<v Speaker 1>Stock Exchange, the j s C, Nicki Newton King. She

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<v Speaker 1>is in town this week for the fourth annual South

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<v Speaker 1>Africa Tomorrow Investor Conference. The j s C is one

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<v Speaker 1>of the coast sponsors. Nicki Newton King, Welcome to Bloomberg Radio.

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<v Speaker 1>Thank you for having me, so tell us a little

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<v Speaker 1>bit more about the j s the Johannesburg Stock Exchange

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<v Speaker 1>and your role there. You've been in this industry for

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<v Speaker 1>many years. I've been in there at the stock exchange

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<v Speaker 1>itself for twenty years, if you can believe it. The

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<v Speaker 1>state of the exchange is are essentially a one stop shop.

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<v Speaker 1>It's completely horizontally and vertically integrated. Means we trade, we list,

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<v Speaker 1>we trade, we clear, we settle equities, bonds, financial derivatives, commodities.

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<v Speaker 1>Really it's the place you come to if you want

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<v Speaker 1>to buy South Africa. Now, recently you said that we

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<v Speaker 1>have to internalize the fact that the way we do

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<v Speaker 1>things in this country, meaning South Africa, needs to change.

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<v Speaker 1>What did you mean by that and give us a

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<v Speaker 1>little context for people that have not been following what's

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<v Speaker 1>going on with the South African economy and the political scene. Yeah,

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<v Speaker 1>for sure, So we are. We have a very noisy democracy,

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<v Speaker 1>and we have a very wide Geni coefficient, meaning that

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<v Speaker 1>we have a very sophisticated business class and and but

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<v Speaker 1>some very economically marginalized, a very deep economically marginalized sector

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<v Speaker 1>of our of our society. And I think business needs

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<v Speaker 1>to change the way it does business to recognize that

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<v Speaker 1>just making money, just distributing that to shareholders just simply

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<v Speaker 1>isn't a good enough way to do business in an

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<v Speaker 1>emerging market like us. It's about how you reach out

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<v Speaker 1>and make sure that the way you do business is

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<v Speaker 1>more inclusive. As you grow, how do you grow inclusively? Well,

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<v Speaker 1>there's a lot of that. That's a tough question, not

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<v Speaker 1>only in South Africa, but a lot of places. So

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<v Speaker 1>as you move ahead, how you how would you plan

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<v Speaker 1>to tackle that? How does it affect your role? Well,

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<v Speaker 1>it's very fascinating because the exchange is at the sort

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<v Speaker 1>of center of the capital market system, and so we

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<v Speaker 1>become a point for for the economically marginalized to talk

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<v Speaker 1>to about how they wish to be included. I think

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<v Speaker 1>the first party is listening, the second party is engaging

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<v Speaker 1>the listed companies about how do you actually look at

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<v Speaker 1>your labor relations, how do you look at how you

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<v Speaker 1>price what are your additional responsibilities in a country like US,

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<v Speaker 1>for instance, in relation to education, in relation to housing,

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<v Speaker 1>relation to health. It's a far broader, more sustainable way

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<v Speaker 1>of looking at business than perhaps one traditional looking at

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<v Speaker 1>in in some of the bigger capitalist markets. Tell us

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<v Speaker 1>a little bit about the effects of interest rate changes

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<v Speaker 1>in the United States on an economy such as that

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<v Speaker 1>in South Africa, for sure. I mean everybody looks at

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<v Speaker 1>what's happening in the US FED and as soon as

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<v Speaker 1>the interest rates increase in America, emerging markets come under pressure.

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<v Speaker 1>So we are an extremely open, extremely well regulated, very

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<v Speaker 1>transparent emerging market that stacks up well from a capital

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<v Speaker 1>market perspective. So international investors look at South Africa and

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<v Speaker 1>say I can bring money in and take it out

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<v Speaker 1>at any given time. The US rates start to increase,

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<v Speaker 1>I think the US starts to US investors start to withdraw.

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<v Speaker 1>South Africa thirty percent of our market any given days

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<v Speaker 1>foreign So it matters what's happening in the States. Yeah,

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<v Speaker 1>you know, South Africa. I guess this is considered an

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<v Speaker 1>emerging market. In what way? Is it emerging still? But

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<v Speaker 1>in what sense? The South Africa gained its economy and

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<v Speaker 1>it's it's companies a status that to me, it seems

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<v Speaker 1>very very developed, very deep, but emerging, anything but emerging.

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<v Speaker 1>It's it's emerging in the sense of the GENII coefficient,

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<v Speaker 1>in the sense that as a as an economy, the

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<v Speaker 1>size of an economic sophistication broadly speaking of the economy

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<v Speaker 1>looks more advanced emerging really than than frontier emerging. But

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<v Speaker 1>the structure of the really most sophisticated parts, like the

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<v Speaker 1>financial markets is absolutely world class. So, as an example,

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<v Speaker 1>the exchange five years in her own rated number one

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<v Speaker 1>in the world by the World Economic Forum for the

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<v Speaker 1>sophistication of the regulation in exchange space. So that's right

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<v Speaker 1>at the very pointy end of sophistication. And so we

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<v Speaker 1>pride ourselves to South Africans in being able to offer

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<v Speaker 1>investors world class investment environment, but an emerging market investment case. Now,

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<v Speaker 1>you've had a lot of political turmoil. You referenced this,

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<v Speaker 1>and I'm wondering if you could just offer people a

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<v Speaker 1>little bit of detail. There are reports that the current

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<v Speaker 1>Finance minister is being probed by police and maybe arrest.

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<v Speaker 1>You've had the Reserve Bank governor say that South Africa's

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<v Speaker 1>rand is currently under valued and that the fluctuations in

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<v Speaker 1>the rand are partly because of political issues. So we're

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<v Speaker 1>a noisy democracy, but we are a democracy and we've

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<v Speaker 1>just had a very noisy local government elections where there's

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<v Speaker 1>been significant transfers of power from the ruling party to

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<v Speaker 1>to the opposition, all peacefully achieved. So that noisy democracy

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<v Speaker 1>brings with it storms for investors to navigate through. The

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<v Speaker 1>Finance minister has been under pressure as there has been

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<v Speaker 1>suggestions about potential charges against them, but those were confirmed

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<v Speaker 1>to be going nowhere this this week. I think one's

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<v Speaker 1>got to recognize there's institutional strength. They're far deeper than

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<v Speaker 1>just the Minister of Finance. So how about the existing

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<v Speaker 1>opportunities for investors in South Africa right now, what investors

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<v Speaker 1>tell us International investors tell us world clast management teams

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<v Speaker 1>across a range of sectors, very deep financial markets, very

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<v Speaker 1>well established, well capitalized banks, very deep um UH institutions. Oh,

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<v Speaker 1>it's specifically industrial related companies. Mining a little bit more

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<v Speaker 1>under pressure. Of course, mining people think is our anchor

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<v Speaker 1>investment case, but it's no longer the big, the big

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<v Speaker 1>investment part of South Africa. As the size of the

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<v Speaker 1>financial services environment in the five and and the size

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<v Speaker 1>of of other broad based industrial companies have grown, has

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<v Speaker 1>the mining sector in in South Africa? I mean, has

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<v Speaker 1>this been effected not only by competition, but the ray

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<v Speaker 1>Hunt has dropped significantly in value against the I think

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<v Speaker 1>it's done about eighteen percent so far this year. The

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<v Speaker 1>mining industry is under pressure at the moment. And of

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<v Speaker 1>course you've also had historically in the last two years

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<v Speaker 1>quite a lot of labor unrest in the mining space.

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<v Speaker 1>That's significantly calmed in the last year. So hopefully as

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<v Speaker 1>commodity prices recover, mining will find its space. So is

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<v Speaker 1>it unusual for a woman in South Africa to become

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<v Speaker 1>the CEO of the stock exchange the largest on the continent,

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<v Speaker 1>the twenty largist in the world. Well, it's uh and

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<v Speaker 1>the first female CEO of the Stock Exchange. But when

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<v Speaker 1>I was appointed, the head of the Reserve Bank was

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<v Speaker 1>a woman. The head of one of our biggest big

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<v Speaker 1>four banks was a woman. There are a lot of

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<v Speaker 1>senior women in South Africa. We really pride diversity at

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<v Speaker 1>the core of what we do in South Africa because

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<v Speaker 1>diversity is a competitive advantage. You need people who think

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<v Speaker 1>differently round a table when you're looking at really complex problems.

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<v Speaker 1>So it's something I've been very proud to lead. It

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<v Speaker 1>is unusual globally. It's not unprecedented, but it is unusual globally.

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<v Speaker 1>Was it ever thus in South Africa? No, Well, I mean,

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<v Speaker 1>you know, I think we're beginning to see more and

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<v Speaker 1>more more women and and hopefully they'll be more following me.

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<v Speaker 1>Are there any plans to change policies at the Johannesburg

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<v Speaker 1>Stock Exchange in order to solicit more foreign investment. We

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<v Speaker 1>rarely pride ourselves from an exchange perspective of being very

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<v Speaker 1>open to attracting in specifically top international companies listing on

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<v Speaker 1>in South Africa. As an example, a b in bev,

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<v Speaker 1>the world's largest brewer, took twenty seven days from the

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<v Speaker 1>time that they spoke to us the first time to

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<v Speaker 1>the time that they were listed. They said, of their

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<v Speaker 1>four global listings, it was the most constructive world class

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<v Speaker 1>listings process they've ever had. From an investor perspective, we

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<v Speaker 1>only hear complementary things from investors. But in my mind,

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<v Speaker 1>if investors need us to to shop and that what

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<v Speaker 1>we do, then we're always open. Because you're publicly traded,

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<v Speaker 1>publicly traded company for sure, and that's I think a

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<v Speaker 1>good thing for an exchange to actually live part of

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<v Speaker 1>its own business model, don't you think so? In terms

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<v Speaker 1>of some of the upcoming what's the next South Africa?

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<v Speaker 1>What are the next big companies? I think technology, for example,

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<v Speaker 1>there's in many parts of Africa the continent now they're

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<v Speaker 1>they're tech startups of all shapes and sizes. What's what's

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<v Speaker 1>what's really interesting right now in South Africa and what's

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<v Speaker 1>interesting in South Africa is to start to see the

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<v Speaker 1>real big South African entrepreneurs look to use their South

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<v Speaker 1>African base as a platform for expanding on the continent.

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<v Speaker 1>They become a proxy for the African story and that's

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<v Speaker 1>going to be a good news for the for for

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<v Speaker 1>investors through the j C because they can use a

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<v Speaker 1>world class environment to access the African story, the commodity story.

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<v Speaker 1>Just last word to you. I mean, because we talked

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<v Speaker 1>a little bit about gold, but there's also a lot

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<v Speaker 1>of thermal call for example in South Africa, there is

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<v Speaker 1>a there are a lot of different commodities. But the

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<v Speaker 1>commodity space and is a is a pretty difficult space

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<v Speaker 1>to actually to to actually deeply innovate in, especially in

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<v Speaker 1>the labor with the labor space, so we have we

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<v Speaker 1>are going to have to work quite hard to unlock

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<v Speaker 1>and ride that commodities wave. I think I want to

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<v Speaker 1>thank you very much for coming in and spending time

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<v Speaker 1>with us. The chief executive of the Johannesburg Stock Exchange,

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<v Speaker 1>Nikki Newton King the johannes Stock Exchange up twenty seven

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<v Speaker 1>and a half percent so far this year. You're listening

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<v Speaker 1>to take King Stock. I'm pim Fox, my co host

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<v Speaker 1>Kathleen Hayes, and this is Bloomberg. Yeah,