Record volumes cause trading outage at JSE

Tuesday saw R145 billion of equities traded, which caused “significant delays” in processing on some systems, bourse operator JSE said. Trading was due to start at 09:00 local time, but the exchange said at 12:00 that the open is still delayed and that it would update clients an hour later.

Naspers dominated trading in Johannesburg Tuesday, falling 8.1% on surging volumes following the completion on August 16 of a restructuring and exchange transaction with unit Prosus NA. The deal changed the weighting of the two stocks in key South African equity indexes, pushing money managers who follow the gauges to adjust their portfolios.

Read: Naspers, Prosus complete share swap, new cross-holding structure

“My understanding is that the JSE is struggling to process the volume of trades it experienced yesterday,” said Warwick Bam, head of research at Avior Capital Markets. “It certainly has everything to do with Naspers and Prosus and the index rebalancing.”

Naspers now accounts for 5.9% of the benchmark FTSE/JSE Africa All Share Index compared with 12% as of Tuesday, data compiled by Bloomberg show. Prosus has jumped to 7.5% from 0.9%.

Wednesday’s delay means investors in Naspers, the biggest shareholder in Tencent, are unable to trade in reaction to earnings from the Chinese online titan released after the market close in Hong Kong.

Naspers has a 29% stake in Tencent, through Prosus.

The JSE said it is engaging market participants and will provide “ample notice” on the start of trading to ensure a smooth and orderly opening. Its other markets were operating as normal, the company said.

Tuesday’s trading surpassed a previous record of R71 billion from December 2017, the exchange operator said. In 2017, the JSE paid out claims from clients and conducted reviews after suffering a delay in trading.

The Johannesburg bourse experienced “elevated activity” yesterday as rebalancing took place in the wake of the Naspers/Prosus share swap, Siobhan Redford, an analyst at Rand Merchant Bank in Johannesburg, said in a note to clients.

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