Technological and institutional panic may be eroding return on investment
There is a link missing in the rehashing by commentators and analysts of the accounting, governance, and regulatory issues that give rise to corporate scandals such as Steinhoff and Resilient. It’s the role played by investors and technology in creating financial crises.
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By nature and by convention, business struggles to be altruistic or socially aware. The profit motive is not just a human drive, it’s built into legislation all around the world. Profit is hard-won and ‘giving it away’ is counter-intuitive.
So, it takes a fresh way of looking at things to enable business to automatically serve a social need while doing business as usual. Or, if you like, to make business as usual socially beneficial.
Nowhere is radical change more desperately needed in South Africa than in the capital markets. The model that has dominated for more than 60 years is stagnant, with no broadening of the capital markets. It is also hopelessly skewed against the private investor.
Principles are funny things. They really do make things easier and better. As we will begin to see happening in the financial markets in South Africa.
The entrance of ZAR X, South Africa’s new stock exchange, appears to have rattled the country’s stockbroking community. Having worked with only one stock exchange for the past 58 years, stockbrokers appear now to be unsure of how to operate in a multi-exchange environment.
