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00:00We've been discussing vaccines for the past 30 minutes and we do every day. You're the CEO of the stock exchange on that. How much will the vaccine mean to your market. I mean to foreign investors coming back to South Africa. Morning menace. I think that the introduction of the vaccine would be very important for global markets and that would have a compounding effect on South Africa. South Africa has fared pretty well under the constraints of the pandemic. We've recently completely opened up our economy and relative to other emerging markets. We are doing well. That said the news of the vaccine I think will flood an interest and crowd in the developed market funds into the emerging markets and the risk appetite will lift. And South Africa is well poised as a distant. As an investment destination. At the moment you're on track to register the largest yearly outflows of foreign money since Bloomberg started gathering this data. The end of the 90s. Do you think that a vaccine arrival will that draw foreign investors back into South Africa's market. And Mary I think it's a confluence of many things that will draw funds back into South Africa. The first aspect is addressing macroeconomic fundamentals in South Africa like the fiscal cliff like the low growth like the unemployment rate. The minister of finance recently presented his medium term budget speech where he's made substantial commitments and unprecedented constraints in public sector spending. There's also an enormous focus on infrastructure investment into the country and many stock specific opportunities of the present very attractive yield opportunities. In addition to that the bond market yields relative to the underlying risk play play well above the equal counterparts with yields of between 7 and 9 per cent on the 10 year GAVI. And everybody is hunting for you. They land. So that will be part of the narrative. We see the rand at turnaround this month along with the E.M. appetite as you say crowding and the appetite is there. How important is a more stable and a rallying round to drive flow of equity into your market. Or rather ironically the volatility of the rand often attracts inbound investors off of the back of that potential yield. That said when the rand deteriorates we tend to see more after the more inflows into the country. Many of the hallmark of the of the JSE is that many of the companies are dual listed. More than a third of our companies are dual listed. They are they are crowding and obtain much of their revenues from external to South Africa sources. So sit more than 70 percent of the top 40 stocks derive their revenue from offshore. So there is certainly a rand hedge and an obvious attraction for yield. It's been as we've been discussing a wild ride for markets in general for 20 20 but when you look at Johannesburg's all share index we're pretty much back to square one exactly where we started at the start of the year. What has been the volume on the exchange this year relative to what we saw in 2019. Volume so up more than 20 percent year on year and during the March months that hyper volatile period of volumes I feel that 100 percent. So I think some of the factors and features in the economy that protect us all that many of our large stocks derive the income in next generation technology companies such as must pass and process who owns 30 percent in 10 cent. In addition to that we've had an enormous PJM rally over the last year. Great resources rally banks have taken a real hit in a market cap and they're starting to now come back. So I think overall the fact that we have so many dual listed companies many large scale Rand Hedges and we also have very deep markets within the South African economy because the collective investment schemes are controlled by exchange control. And so 75 percent of the investment remains in the country which is why we have the 20th largest exchange by market cap in the world notwithstanding the fact that we're the 30 third largest by GDP. Laurie can I go to the other side of that trade you mentioned NASDAQ that Knapp says and process but but there in lies the other side of the risk for foreign investors. That is such a concentration risk. Does it diminish or does it risk diminishing the attractiveness of your market. South Africa is a concentrated market. We have four large banks and we do have large listed entities that concentrate in the market. That said we also do have a wide diversification across industries. We have a deep liquid financial markets. We have companies like Global news 24 hours a day on air and @TicToc on Twitter. Powered by more than 2700 journalists and analysts in more than 120 countries. This is Bloomberg past invested in the tech sector and then we have a very well diversified resource market. So yes it is a it is a concentrated market but we offer the yields that compensate quite quite handsomely for those concentration for the concentration risk. One of the biggest industries known for South Africa is of course mining. China is the only G 20 country that we are seeing economic growth for 2020. Well that materially impact do you think. The listed South African miners. I think there are a number of factors that affect the mining industry. The exchange rate affects us and you would have seen the rand went to an all time low in March after we were downgraded. And that ironically bodes well for the for the resources company in the mines. Our minds are also very well diversified globally and have bought up assets outside of South Africa. So I think that there are multiple factors at play and the primary source of primary mining is not the only factor. That said China has swung back. It is a large export partner and a large resources partner. And that bodes well for the country. Later you have suggested that because foreigners are forced into rand denominated collateral in other words all my margin my initial margin my variation margin is all run based. You've made some utterances that there's a possibility of putting forward a dollar denominated settlement and margin placement. When will that come. How far advanced is that. We put forward three different exchange control reforms and all three were announced in the medium term budget speech which we're very pleased. Receiving a formal endorsement by the government. The first is the dollar based collateral. We are working with government and policy makers to put in place mechanisms that can enable that. In addition to that we're also looking at listing dollar based companies which would be a profoundly transformational step for the country and a very important growth note to crowd in external finance and also to to increase our presence and our credibility in emerging market indices.

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South Africa Well Poised as Investment Destination: JSE CEO

Leila Fourie, chief executive officer at Johannesburg Stock Exchange, discusses what a coronavirus vaccine would mean to the market, South Africa’s economy and foreign investment. She speaks on “Bloomberg Daybreak: Europe.” (Source: Bloomberg)

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