Concentration Conundrum

Abstract

Roadshow to Prescient Securities Clients discussing the local index concentration issues, and how NPN’s unbundling of Prosus will affect the indexes.

Date
Event
PSec Roadshow
Location
Cape Town, Johannesburg

This piece gives a brief overview of the evolution of the FTSE/JSE market index, showing that the current problem of consituent concentration is not new.

  • Provide a detailed discussion of the reasons for the FTSE/JSE index methodology review proposed in December, specifically:

– Explain the FTSE/JSE float methodology, with the intention of providing readers with clarity on how foreign companies listed on the JSE are treated differently.

– Critique the index float methodologies proposed by the FTSE/JSE to address the current issues surrounding index construction and detail what we believe the best solution to be.

  • Discuss the possible impact on the different indices’ weighting schedules following Naspers’ listing of NewCo.

– Argue why we believe it is likely that the NewCo listing will not reduce Naspers’ weight in the uncapped market indices meaningfully.

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Nico Katzke
Senior Quant

Quantitative Analyst