IF YOU happen to follow the tech sector on Wall Street, you may have noticed two prominent stock splits announced over the past two weeks. The first by Apple, a 4 -for-1 split, and the second by Tesla, a 5-for-1 split. A stock split ‘creates more shares of a company without changing the underlying value of any single investor’s holdings.”
Stock splits were once considered common when a company’s share topped $100, but fell out of favour during the dot.com boom, since then, they have been making a reappearance and driving retail investors on Wall St.
If our reserve bank can lower interest rates, once considered unthinkable, then surely it is time for entrenched capital markets on the JSE to consider doing things differently?
The country’s tech sector is dominated by Naspers (NPN) and Prosus (PRX), which together make up more than 20% of the benchmark index. Both are affected by the US-China trade war and sanctions announced by Trump against WeChat.
It is a disgrace that this has been allowed to happen, not the sanctions, which I believe are well-deserved given the clamp-down on press freedom in Hong Kong and the arrest of Jimmy Lai, and failure by Naspers to support the TRC process and truth about apartheid, but rather the situation where the fate of two interlocked stocks, (Naspers NPN currently trading at some R3113 and Prosus PRX R1,690) are able to bounce the local bourse by 5-10 percentage points.
Notwithstanding the debacle over NPN share structure. The concentration of capital suggests that far from being a rosy picture of competition the South African tech sector is held captive by one or two big players. Unless the country modernises, either by making share ownership more accessible to retail investors, or by doing more to including local tech companies and startups, the country will be stuck with a failing Post-Reset resource and industrial sector , that could turn out to be unprofitable at any price.
Where the nation’s households are dependent upon income from retail investment, the nation’s finances appear to be beholden to vested interests and boardroom intrigues driven by the Public Investment Corporation. Instead of postponing a Basic Income Grant (BIG), or repositioning the PIC to take a more active role in a sovereign investment strategy, (does anyone remember that fund proposal announced shortly before lockdown?) our government could be unleashing fiscal stimulus where it matters most — creating an SMME revolution that tackles climate change, renewable energy, micro-grids and emerging technologies.
Instead of building more roads and bridges, and revisiting the siege economics of the 1970s, we could be rolling out mass transit solutions, high speed trains and technology smart connected cities to rehouse low-to-medium income families. See one award winning proposal here.
If households were empowered to produce basic necessities via food garden allotments, and electricity via community micro-grids and an energy commons, we would be in a lot better shape moving forward.
Instead of spending tax rands on white elephants such as Medupi and Kusile, we could be driving energy efficiency and large scale battery energy storage alongside an EV support programme that gets minibus taxis off the fossil fuel habit.
Instead we have created a predatory PPE kleptocracy and Eskom energy ransom system that has nothing to do with equal opportunity and everything to do with the politics of servitude and feudalism which is at the heart of the ANC ideological discourse.
Time to give Pretoria/Tshwane bureaucrats their marching orders.