Why Do Most South Africans Invest In NAS100 Instead Of JSE?

Why Do Most South Africans Invest In NAS100 Instead Of JSE?
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South Africans can trade or invest in both Nas 100 and the JSE. The NAS100 is an index of non-financial companies which are listed on the NASDAQ stock exchange while the JSE is the largest stock exchange in Africa with over 473 listed companies. This simply means that both NAS100 and JSE form a part of the stock market. The JSE is located in Sandton, Johannesburg, South Africa while the NASDAQ stock exchange is based in New York City, United States. It is important to note that despite the fact that the JSE is based in South Africa, most South Africans prefer to invest in the NAS100 (based in the United States) instead of the JSE. This preference raises some concern about why South Africans prefer investing in a foreign-based stock exchange over a notable stock exchange based in their own country. Let’s dive into what it takes to invest in both the NAS100 and the JSE in South Africa, and also try to figure out the reason NAS100 is preferred over the JSE by South Africans.

Investing In NAS100 In South Africa

There are two major ways anyone can invest in the stock market. These ways are by directly buying companies’ shares with the hope to sell off for a profit in the future and by trading through a broker with or without leverage. Though the NAS100 is listed on a foreign stock exchange, traders in South Africa have access to invest in the index via reputable and regulated NAS100 brokers in South Africa. The NAS100 represents a diverse investment portfolio as this index contains 102 equity securities from non-financial companies with massive market capitalization. Apple, Amazon, Microsoft, and Alphabet are very popular companies that have hit over a trillion-dollar market capitalization and they are all a part of the NAS100. Apart from these four notable companies, the NAS100 also includes technology companies like Cisco, Intel, Micron, Qualcomm, and Adobe. For most retail traders, investing in NAS100 must be done through a broker that is an approved member of the NASDAQ securities exchange. To stay safe, it is best to choose NAS100 brokers that are regulated by the financial regulatory body in South Africa- FSCA. There are quite a number of regulated South African brokers to choose from with different account types, fairly tight spreads, and great trading conditions for both beginner and advanced traders.

Investing In The JSE In South Africa

The largest stock exchange in Africa is the JSE which is located in Sandton, Johannesburg, South Africa. JSE Limited was previously known as the JSE Securities Exchange and the Johannesburg Stock Exchange. The JSE has about 473 listed companies and in 2003 had a market capitalization of US$182.6 billion and an average monthly traded value of US$6.399 billion. In March 2022, the market capitalization of the JSE was at US$1.36 trillion. It is important to know that buying and selling of companies’ shares on the JSE must be done through a JSE-registered stockbroker. Anyone living outside South Africa can also invest in the JSE but it must be through a local stockbroker, bank, or a South African stockbroker. The JSE is involved in the trade of five financial markets which are equities (shares/stocks), commodity derivatives, equity derivatives, currency derivatives, and interest rate products. JSE now utilizes fully electronic trading which is accessible online to anyone via registered stockbrokers. This completely automated and electronic trading system is called the Millennium Exchange. The JSE operates all weekdays from 9:00 am to 5:00 pm excluding Saturdays and Sundays. Traders can speculate on the JSE stocks directly via stock exchanges, via CFD brokers or via Best Binary Options Brokers in South Africa.

NAS100 Versus JSE In South Africa

Though the NAS100 and the JSE are both a compilation of many companies with massive market capitalization, the popularity of these two financial assets is very different among South Africans. The choice of South Africans to invest in NAS100 instead of the JSE is most likely influenced by the following reasons.

  • Companies profile: It is no secret that the NAS100 lists more high-profile companies when compared with the JSE. In the NAS100, we can find brands that are popular and easily recognizable by the average investor. These are brands like Amazon and Alphabet that many regular people trust. It is only natural for South African investors to invest in brands that they like and trust.
  • Availability of the asset on popular brokers: Traders need brokers to place their trades with a securities exchange and many traders trade across different financial markets and already have their preferred broker(s). Many popular and reputable South African brokers allow trading of NAS100. While JSE has its own list of registered stockbrokers that may not be so popular among South African traders.

Conclusion 

The goal of most investors is to make as much profit as possible with the least risk. The assurance of reduced risks gives investors some peace of mind. This is most likely the case with South African investors that prefer the NAS100 to the JSE. NAS100 is an index of some of the largest and most popular non-financial companies in the world and it is only natural for South Africans to invest in companies they know and trust. Though the JSE is the largest stock exchange in Africa, its market capitalization and individual companies profile are not as great as the NAS100. Also, many popular South African brokers allow the trading of NAS100 while JSE has its own registered stockbrokers that many South African traders are probably not aware of. Hence, the natural choice for most South Africans is to invest in NAS100 instead of the JSE.

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