Temporary JSE measure ensures that the two behemoths can fall without pulling everything else down
01 September 2021 - 18:49A purely passive investor tracking the JSE all share index, which weights companies based on their market capitalisation, might think their portfolios are diversified.
Last week, the JSE introduced a temporary measure to ensure that the two behemoths can fall without pulling everything else down with them. “Capping is definitely a good idea considering the size of the two respective stocks,” said Roy Mutooni, an analyst at Absa Asset Management. The problem remains that the two companies derive their value from the same underlying asset base — mainly comprising the group’s one-third stake in Tencent — despite being separately listed. It has been a point of contention as to whether their capping should be as a single stock or as separate entities.
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