- Number of Trades on JSE Equities Market up by 11.6%
- Demand for Currency Derivatives soars
- Commodity Derivatives Market trades a new all-time number of contracts for the year
JSE trading statistics for 2011 show that the number of cash equity trades during the year was up 11.6% (2011: 26,504,221; 2010: 23,758,618) while the value of equities traded was up almost 10% (2011: R3, 2 trillion; 2010: R 2, 9 trillion).
“While most developed markets are in the midst of a financial crisis, investors look to emerging and frontier markets for equity returns. The JSE, with its variety of listed companies, including those with operations in many parts of Africa, was well positioned to service these investors” says Leanne Parsons, Head of Equities Trading at the JSE.
By end 2011, foreigners were net sellers of local equities to the value of R17, 2 billion.
On the JSE’s interest rate market, foreign purchases of South African bonds year-on-year were up 24.3% from R722, 2 billion in 2010 to R897, 7 billion in 2011. The total value of bonds traded on the interest rate market is up year-on-year (2011: R20, 8 trillion; 2010: R16, 8 trillion).
“The global uncertainty continues to keep interest rates very low in developed economies and this offer of cheap money is not necessarily being utilized to but Italian bonds but is being routed to higher growth emerging economies where interest rates and investment returns are higher,” comments Graham Smale, Director: Bonds and Financial Derivatives.
On the JSE’s equity derivatives market, volumes of futures contracts decreased 6.8% year-on-year (2011: 132,318 million; 2010: 141,995 million). Volumes of equity options remain lower year-on-year (2011: 16,505 million; 2010: 18,276 million).
“Market volatility is having an impact on the appetite to take risk, particularly in leveraged products such as derivatives.” comments Smale.
On the JSE’s commodity derivatives market volumes of commodity futures increased by 23.2 % year-on-year (2011: 2,261 million; 2010: 1.835 million). In the same period, volumes of commodity options have increased 25.7% year-on-year off a lower base.
“With increased price volatility in the commodities markets, we experienced continued growth to reach a new all-time record number of contracts traded. This was largely driven by the grain products as market participants looked to manage their price risk with the cash settled metals and energy products also experiencing improved traction,” says Chris Sturgess, Director: Commodity Derivatives at the JSE.
On the JSE’s currency derivatives market the volumes of currency futures contracts traded are 106 % higher year-on-year (2011: 12,835,918; 2010: 6,221,705). In the same period, volumes of currency options contracts traded are up 48.7% year-on-year off a lower base (2011: 1,869,604; 2010: 1,257,408).
“Growth has been particularly strong since May 2011, following the restructuring of trading fees to incentivise large trades. Trade costs are levied according to a sliding scale, making it cost effective for smaller traders and encouraging large transactions which have traditionally been done with the country’s big banks.” says Warren Geers, General Manager: Currency Derivatives at the JSE.
“Additionally, South Africa’s exchange controls have been relaxed to allow a wide group of qualifying clients from trading on the Currency Derivatives market. These include South African and non-resident individuals and corporates, hedge funds and resident financial service providers, as well as collective investment schemes subject to their foreign portfolio allowance.”