The JSE listing of MTN’s Black Economic Empowerment share scheme on Monday 25 November 2019 was meant to pave the way for 89,000 black investors to freely trade shares with their counterparts after a three-year ban.
The drawcard of Zakhele Futhi, which will run for the next five years and then end, was that it would give investors exposure to MTN Group and its profits from SA and the rest of Africa telecommunications operations. This was because Zakhele Futhi has a 4% shareholding in MTN Group , which is the BEE share scheme’s only underlying asset.
This was accomplished, with Zakhele Futhi commanding an opening price of R1.10 on the JSE — 95% lower than the R20 investors shelled out in 2016 for each share.What was the point of buying shares in the first place if they don’t have much value. There will be a long road to empowerment.”At the end of the JSE’s trading session on Tuesday 26 November 2019, Zakhele Futhi shares rose to R16 a share.
The main reason for the slump in Zakhele Futhi shares is its low trading volumes on the JSE. In financial markets, the act of buying and selling of shares in an open market influences the price of shares; the price moves up if there’s more buying/demand and declines if there are few sellers. The restriction in Zakhele Futhi’s case is that investors can sell shares to black investors, limiting the universe of would-be buyers. This is a rule set up by MTN because it wants to transform its shareholder base, and affirmed by JSE rules because Zakhele Futhi is listed on the bourse’s BEE segment.
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