The Johannesburg Stock Exchange (JSE) is the largest stock exchange in Africa by value and the home of South Africa's listed companies, from banks and miners to retailers, telecoms and property groups. The Financial Sector Conduct Authority (FSCA) supervises the market. Prices are in South African rand (ZAR).
This guide explains how a person buys JSE shares, what the main costs and risks are, and what a foreign investor should check first. It is general information and not advice on any share. Rules, fees and tax rates change, so confirm the current position with a licensed broker and a tax adviser.
How a purchase works
You cannot send an order to the JSE yourself. Orders go through a broker that is a member of the exchange, or through a platform that connects to one. After a trade, the shares are recorded electronically. In South Africa the central securities depository is Strate, and the institutions that hold shares on behalf of investors are called Central Securities Depository Participants.
In practice this means you open an account with a broker or an investment platform, fund it from your bank account, and place an order for a share by its name or ticker. The broker handles the settlement and holds your shares in your name or in a nominee structure. Ask which one applies, because it affects who receives company notices and how you vote.
Step 1: choose a broker or platform
South African investors can use full-service stockbrokers, online brokers and investment platforms. They differ in cost, the range of shares they offer, and the tools they give you. Compare four things before you open an account:
- Licence. Check that the provider is authorised by the FSCA. The regulator publishes a register you can search.
- Costs. Look at brokerage, the platform fee, minimum fees per trade and any custody fee. A flat minimum fee can swallow a small order.
- Access. Some platforms only offer a selection of JSE shares, and some also offer foreign markets and exchange-traded funds.
- Protection. Ask how client assets are held and what happens if the provider fails.
Step 2: open and fund the account
Expect to give proof of identity and address, your tax number and your bank details. South African providers are required to verify customers, so the documents are standard. A foreign investor will usually be asked for a passport, proof of address abroad and information about the source of funds, and may face extra checks.
If you are a non-resident, ask before you send money how the funds will be converted into rand and how proceeds would be taken out again. South Africa has exchange control rules, and the practical route for a non-resident is to use a bank or broker that handles the reporting. Our guide to foreign investor rules lists what to ask.
Step 3: place an order
A market order buys at the best price available now. A limit order sets the most you will pay. For large, active shares the two are close. For a thinly traded share, use a limit order, because a market order can fill far from the last price. Check the day's volume and the gap between the buy and sell prices first.
You can follow live and end-of-day JSE prices, gainers and losers on South African stocks before you decide.
Costs to count
Every purchase has several costs, and together they matter more for small orders:
- brokerage or the platform's fee;
- a levy to the exchange and the clearing system;
- securities transfer tax, which South Africa charges on the transfer of listed shares;
- value-added tax on certain fees.
Dividends are subject to dividend withholding tax for most investors, with rules for different holder types. Gains may be subject to capital gains tax for individuals. The rates and exemptions are set by the South African Revenue Service and change, so check the current figures. South Africa also has tax-free savings accounts that can hold listed shares within an annual limit, which can matter for long-term investors.
The index and what it shows
The main benchmarks are the FTSE/JSE All Share Index, which covers most of the market by value, and the Top 40, which tracks the 40 largest companies. Many of the biggest JSE companies earn a large share of their profit outside South Africa, so the index can move with global commodity prices and the rand rather than only with the local economy. Read how to read a country index for how to interpret a move.
The rand and the risks
The rand is volatile compared with the currencies of large developed markets. For a foreign holder, the return in your own currency combines the share's change and the rand's change. A share that rises 10 percent in rand can still lose money for you if the rand falls more than that. The guide on currency risk for foreign stocks shows how to separate the two.
Other risks to weigh: a concentration in mining and financial companies, political and policy news, power-supply and infrastructure problems that affect company earnings, and the fact that many smaller JSE shares trade rarely.
Exchange-traded funds and other routes
If you do not want to pick shares, the JSE lists exchange-traded funds that track local and global indices. They spread risk across many companies and usually cost less than actively managed funds. Compare the total expense ratio and what the fund actually holds. Our expense ratios and fees guide explains the comparison.
A worked example
You invest 20,000 rand in a share at 50 rand. You buy 400 shares. Suppose total costs, including brokerage and securities transfer tax, come to about 1 percent, or 200 rand, so you pay 20,200. If the price rises to 56, your shares are worth 22,400, a gain of 2,200 before the costs of selling and tax on any gain. If it falls to 44, they are worth 17,600, a loss of 2,600 including the cost of buying. The figures are illustrative and rates differ by broker and by year.
Checklist before you buy
- Confirm the broker or platform is FSCA-authorised.
- Work out the total cost of buying and selling, including tax.
- Check the share's trading volume and use a limit order if it is thin.
- Read the latest annual report and the dividend history.
- Plan the currency and, if you are a foreigner, how money leaves South Africa.
- Keep every contract note for your tax records.
This guide is for general information, not financial advice. See the disclaimer.