Black South Africans own two-thirds of the JSE — the numbers race nationalists ignore

This article was first published by The Common Sense.Common Sense's Econ Desk crunches the numbers on JSE ownership and lands on a striking figure: black South Africans hold an estimated 66.55% of locally owned JSE capital, compared with 33.45% held by whites. The analysis strips out foreign ownership (roughly a third of the market) and works through the PIC, private pension funds, state holdings, retail shareholders and BEE structures piece by piece. Stress-testing the assumptions still keeps the estimate comfortably between 60% and 70%. The takeaway runs counter to "nothing has changed" narratives — though the piece flags a follow-up on per-capita wealth gaps between an established white middle class and an emerging black one..From The Common Sense.Black South Africans hold an estimated 66.55% of the locally owned capital on the Johannesburg Stock Exchange (JSE), compared with 33.45% held by white South Africans. That estimate excludes foreign investors and uses the broad definition in the Broad-Based Black Economic Empowerment Act, which includes black, coloured, and Indian South Africans.Estimating the racial breakdown of the ownership of the JSE requires a number of steps and assumptions. The first is to understand that roughly a third of the JSE is foreign owned. That share needed to be stripped out of the analysis. A second step is to understand that the JSE is owned by various types of investors. Individuals who buy shares directly are one such type. The state through its pension fund is a second type.Then there are private financial institutions and pension funds that invest in the JSE. The share that each type of investor holds of the market needed to be calculated. Thereafter it was necessary to estimate, based on what we know about the structure of the broader economy, what share of the beneficiaries of those types of investors were probably black, or probably white.The final ownership estimates hinge on the accuracy of those estimates, but even where the analysis tested different high and low points, it found that the ultimate conclusions remained comfortably within a band that placed black ownership somewhere between the low 60 percentiles and the low 70 percentiles.How the local market breaks down, and who owns each pieceThe Public Investment Corporation(PIC) owns roughly 20% of local JSE shares. This is the money that the government invests on behalf of the country's civil servants. The Department of Public Service and Administration's own employment records put black representation at around 90% of government staff.We therefore calculated that the PIC contributed roughly 18 percentage points to black ownership of the local JSE (90% of 20% of the JSE equals 18%).Private funds own roughly 44% of local JSE shares. This is private-sector pension and provident fund money. The working assumption that we settled on is that South Africa's black middle class (we have separate estimates of the size and growth of the middle class), accounts for something between 40% and 60% of the beneficiaries behind this money.We therefore calculated that private funds add roughly 22 percentage points to black ownership of the local JSE.State holdings own roughly 3% of local JSE shares. This refers to shares held directly by government and state-owned entities, separate from the PIC pension money discussed above. The main example is the Industrial Development Corporation, a state-owned development finance institution with direct stakes in listed companies such as Sasol. This analysis assumes that these holdings are 90% black-beneficial as this is roughly the share of the national population that is black.We therefore calculated that state holdings add roughly 2.7 percentage points to black ownership of the local JSE.Individual shareholders own roughly 3% of local JSE shares. Direct retail share ownership has historically skewed white, reflecting who has had the disposable income and financial-market access to invest directly. This analysisassumes that between 40% and 50% of these individual shareholders are black.We therefore calculated that individual shareholders add roughly 1.35 percentage points to black ownership of the local JSE.Everything else, close to a third of the local market, around 30%. This catch-all chiefly covers Black Economic Empowerment (BEE) ownership structures, where a block of shares in a company is set aside for black shareholders or trusts and held for a fixed number of years, typically financed by debt repaid out of dividends, before beneficiaries can sell. This category also includes other holdings that don't sort cleanly into the categories above. Assumed 70% to 80% black-beneficial, reflecting that most of what sits here is BEE-related empowerment stock by design.We therefore calculated that this category adds roughly 22.5 percentage points to black ownership of the local JSE.Add the black contribution from each bucket, and the total lands at 66.55% black and 33.45% white.We tested the limits of that estimate by pushing the ownership estimates down to their lowest plausible levels, and up to their highest plausible levels, in order to stress-test the accuracy of our 66.55% number. The chart below shows how we did that by developing what we called a conservative case, a central case, and a generous case..The lowest we could make the black ownership rate was around 60%. The highest we could make it was just over 70%. As a consequence, we are relatively confident that the 66.55% estimate is a fair judgment..Read more:.South African firms seek local control of ArcelorMittal SA.At a certain level, the data suggest that South Africa has made more progress, in terms of the ownership of the economy, than some of the doom-y analysis suggests. Certainly, claims that nothing has changed in the country over 30 years are false. On a per capita basis, of course, that statement can be qualified and our initial estimates, that we will write a second report on, reveal the implications of a South Africa demonstrating a multi-generational, established white middle class, read against the still emerging black middle class, read against the high levels of black unemployment..This article was first published by The Common Sense and is republished with permission..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

Black South Africans own two-thirds of the JSE — the numbers race nationalists ignore

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