Is the AltX doing what it is supposed to do? An analysis of the JSE Alternative Exchange

Van Heerden, Carel (2015-03)

Thesis (MBA)--Stellenbosch University, 2015.


ENGLISH ABSTRACT: This research report investigates the history and current status of the Johannesburg Stock Exchange Alternative Exchange and its performance over time. The focus is on comparing the AltX with the JSE Main Board, the JSE top 40, The JSE Small Cap Index and London’s Alternative Investments Market AIM. The different listing requirements and the JSE Main Board will be explored. It then goes further to compare the performance of the JSE with that of AltX and AIM over time. A comparison between listings and de-listings is drawn between the AltX and the JSE Main Board. Complete risk analysis is then conducted in an attempt to compare the risk of listing on AltX, JSE and AIM and determine whether the AltX holds more risk than the other exchanges given its relaxed listing requirements and market sentiment around AltX. In comparing risk analysis with market sentiment as well as actual results, it can be concluded that AltXwhen analysed using beta; standard deviation; maximum draw down; Value at Risk; and the Sharpe ratio, does not carry significantly more risk than the JSE Main Board or AIM. The AltXdoes meet its requirements and is doing what it is designed to do, namely offering an opportunity for small and medium sized companies to raise capital and providing investors with the opportunity to become shareholder and trade in those shares as well as being a spring board to the JSE Main Board, but that moving to the Main Board does not always create more value for shareholders or has a positive influence on share price or liquidity.This brings the conclusion that company performance is still based on the individual performance of the company and not dependant on where the company is listed.

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