The future's mine, mine, mine
David Shapiro: My late dad, whose 60-year working life was devoted to trading gold shares on the floor of the JSE, would sing a parody of Moonlight Bay, incorporating the names of listed gold mines in his lyrics.
His spoof went something like this: "We were sailing along, on Luipaardsvlei. I could hear the Freguls (Free State Geduld) singing. They used to say: you have Bracken my heart ." And so on.
It was his tribute to South Africa's status as the resource supermarket of the world.
When I joined the stock market, early in 1972, there were over 40 gold mines quoted on the JSE, each classified according to their particular lease area. There were a multitude of mining finance houses, platinum, coal, diamond and other mines listed as well. The mining boards buzzed with activity in the centre of the trading floor while action in the financial and industrial markets proved a minor sideshow on the fringes.
International investors searching for exposure to commodities needed not look beyond the "Cape" for fulfilment. The Australian, Canadian and even US markets were no match for the JSE either in capitalisation, quality or liquidity.
Local brokers established broad networks of foreign correspondents, communicating primarily by telex and, because of stern exchange controls, settling transactions through the mechanism of the financial rand, a dual currency introduced by the Reserve Bank especially to facilitate offshore security deals. The financial rand traded at a significant discount to the official or commercial rand and could only be bought or sold by foreign entities for the sole purpose of investment in listed bonds and equities.
It was literally and figuratively South Africa's golden age.
My father warned me at the time that our supremacy would not last and that by the turn of the century only a few of the larger long-life mines would survive. As a young man in my 20s I grew hesitant about a career in stock broking, anxious about the prospects of squeezing out an existence in a market devoid of heavyweight mining counters.
My concerns were essentially unwarranted. The 80s were characterised by a cycle of listings around the development of ground-breaking hardware and software for the revolutionary new personal computer, while the 90s heralded an exciting era of transformation.
Shortly after widening its membership to include corporates, the JSE moved from an inefficient open outcry market to a more effective electronic trading system. The inflow of capital on top of the dramatic easing of prohibitive exchange-control regulations amplified trading volumes and opened the way for the introduction of novel derivative products.
With innovative technology came change and growing rivalry. The fall of communism and modernisation policies in a number of Asian economies promoted travel and trade into these formerly forbidden markets, thereby unlocking a surfeit of commercial opportunities. Access to information and executing cross-border trades in the meantime was becoming simple as the internet increased its influence and expanded its reach. The world's major financial markets were quick to button-on to the improved listing prospects, promising emerging companies easy access to capital and appealing expansion strategies.
Their plans certainly brought success. A number of South Africa's leading companies like Anglo American, BHP Billiton and SABMiller succumbed to the temptation, transferring their primary listings from Johannesburg to London. Full credit to management of these corporations; the move transformed these former minnows into global giants, much to the delight of their shareholders.
Although the JSE continues to prosper financially and remains a superbly administered institution, in a broader context its capital-raising role has diminished acutely over the past decade, a position that will be further threatened by a series of mergers between a number of world's major stock markets.
My dad correctly foresaw the decline in South Africa's gold production and our loss of influence as a global resource market, but he failed to anticipate the rise of China and the affect its rapid expansion would have on the demand for commodities. In an interview on Friday, Anglo CEO Cynthia Carroll said mining will be the lifeblood of the 21st century global economy.
South Africa with its abundant mineral reserves once more faces a prosperous future. This time, though, it won't be gold that attracts investors but the allure of platinum, iron ore, coal and nickel. It could be time to rejoice again; "Hi ho, hi ho, it's off to work we go."