Twenty-five years ago I was working for the FM — a brief stint at the old Wale Street offices before I returned in 2011. A lot has changed in that quarter of a century, especially on the JSE.
With AI and the big moola to be made from these game-changing applications pervading almost every investor’s conversation, a little historical perspective might seem out of sync with the times.
But perhaps it might be instructive. Looking at a copy of the Stock Exchange Handbook for January 2001-July 2001, you would see an obvious sweet spot in the financial services segment with no fewer than 55 (yes, 55!) listings. Many more were scattered around the sprawling (yes, sprawling) development capital and venture capital markets. Small banks, boutique fund managers, stockbrokers and specialist financiers were all the rage — and older readers might remember names such as BJM Holdings, Regal Treasury, Saambou, Tigon, TBB Holdings, Cadiz, E-Data Holdings, IOTA, Viking Investments, Tradek, Greenwich Group, Appleton, Unifer and Paradigm Capital.
The older established players in fund management and banking were, at that time, viewed as decrepit and out of touch with fast-changing trends. A good number of new banking licences were doled out — because everyone with a half-decent customer base could offer banking services better and more efficiently than the big banks.
That little snapshot was scarcely six months away from what became known as the JSE’s A2 banking crisis, which was largely triggered by fast-growing banking business Saambou running into a spot of bother. There is nothing quite as frightening as a run on a bank by depositors, and the inevitable speculation about which bank could be hit next. Consequently, others followed Saambou, some quite spectacularly — most notably acquisitive financial services conglomerate BoE, which had to be rescued by Nedbank.
Yes, cutting-edge investment themes can be compelling … until they are brutally reality-checked by underlying economics that paint a less optimistic outcome than initially envisaged.
More grounded investors, 25 years ago, could have bought Standard Bank for as little as R21.30 and FirstRand for as little as 550c. And collected a heap of dividends on the way … provided they stayed put through the global financial crisis in 2008. Even better, you might have picked up Capitec at less than 100c when it listed in 2002 to a most sceptical reception.
I’m not saying I prefer Reunert to rushing into the IPO for OpenAI, Altron to Anthropic or even Datatec to Databricks. I’m just saying maintain a stoic, long-term outlook, especially when the market’s value judgments might be clouded by pervasive euphoria.
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