JOHANNESBURG – This stock exchange is one of the oldest and most advanced. It is accessed online, which attracts investors from all over the world. The JSE is the epicenter of stock trading in Africa. Profitable trades are a click away, and convenience is undeniable.
Today, the JSE is largely bearish due to the impact of COVID-19. Many companies listed on the exchange have reported adverse effects on their trade and revenues. However, any market goes through ups and downs. As prices fall, investors can snatch impressive bargains that will gain value in the future.
According to investment expert Alec Hogg, “Lower share prices mean you can buy a bigger slice of the company for your rand.” Today may be the best time to invest in South African companies. So, how does the JSE work?
Why Companies Get Listed
A business gets listed on JSE to attract investor capital. The funds are used for corporate development and expansion. Eventually, listing facilitates improvement within a company. Its public profile is higher, so it is more noticeable for customers, partners, investors, and the media.
Minimum Investment Requirements
This depends on the brokerage and the instrument. Different classes of assets require different investment scales. Some ETFs must be traded for at least R300 per month or R1,000 per year. The JSE offers equity, derivative, and debt products.
For example, Allan Gray Unit Trusts gives clients the freedom to decide when, how much, and how to invest. They may boost their investments with lump sums as they like. For the initial payment, the minimum is R20,000. For subsequent additions, it is R500. A debit order of at least R500 may be set, changed, or canceled online.
Where to Start
Begin by finding a reliable stockbroker. Today, residents of South Africa may choose between global and home-grown brands. International companies have a competitive edge, as they serve millions of clients worldwide. For instance, ForexTime provides an affordable entry into stock trading in the country. Account registration is quick, and customer support is always reachable.
Trades on the JSE are facilitated by dozens of firms. Currently, individual investors may choose from 12 companies providing trading online. This is because digital platforms are still a relative novelty for the region. It is possible, albeit less convenient, to trade without them.
Discretionary or Non-Discretionary?
These are two types of accounts. If you choose the first one, the broker will have a right to make trades without your consent. This means you can essentially delegate decision-making.
The company will manage your funds in order to achieve your investment goals. Clients may specify their risk tolerance level, and it will be adhered to. The option is most attractive to inexperienced traders or those with little time for thorough research.
A non-discretionary account does not allow such delegation. You will be making your own decisions. This type is also known as an “execution-only” account.
How to Fund Your Brokerage Account
Once a trading account is registered, wait for an email from your broker. It will provide the necessary banking details so that you can transfer funds. Today, wire transfer is the most efficient way. When the money lands in your account, you can start trading.
How to Open a Trade
The procedure depends on the broker. Generally, clients buy and sell shares through their platforms or apps. The process is mostly intuitive. It is similar to trading via ETrade or TDAmeritrade.
How to Collect Dividends
It is easy to collect dividends from South African stocks. For securities purchased via an online broker, dividends land in your account automatically. You may then decide how to use the funds – reinvest or request a withdrawal.
Preference (Preferred) Shares
As the term suggests, these shares have priority over ordinary or common shares. The securities give you special rights. They pay a fixed dividend before ordinary stock dividends are paid out.
This type of equity is accessed by pros and private investors who want average risk and medium return. In comparison with ordinary shares, the instrument is less risky. Owners of preferred shares are always first to receive their dividend payments.
Blue Chips on JSE
The JSE has its own blue chips. These stocks are seen as the most reliable. According to experts, the top 4 includes:
- Anglo American,
- MTN Group,
- BHP Billiton.
Follow Trends Closely
Investors are advised to keep an eye on The PowerStocks Research JSE Share Watchlist (JSW). Subscribers receive vital data on share action. This facilitates analysis and helps them spot the best entry and exit points.
Trading requires patience. Do not expect a 10% daily return. Thanks to compounding interest, even a 1% return can amount to impressive profit. Your 10,000 rand can turn into 120,000 in a single year.