Construction is a highly cyclical sector with its performance dependent on economic booms and busts. Leading up to the 2010 Fifa World Cup, for example, the number of new JSE-listed companies in the construction sector dominated with firms such as Aveng, Murray & Roberts and PPC featuring in the JSE Top 40 Index.
Unfortunately, this was followed by an unprecedented number of large contractors liquidating, filing for business rescue or delisting.
Over the past decade, the country’s depressed economy combined with increased government debt and dampened investor confidence has led to low government and private sector infrastructure investments. However, with a renewed government focus on the sector, the investment case finally seems to be slowly turning around.
Between 2008 and 2018 the value of public-listed construction companies fell by over 60% because of the delisting or sale of companies to unlisted black-empowered entities.
A slowdown in economic growth resulted in declining investment in public sector infrastructure growth which had a knock-on effect on construction businesses. In the past five years, construction companies Group Five, Esor and Basil Read were placed in business rescue. Both Group Five and Esor subsequently delisted from the JSE in 2020, while the future of Basil Read remains uncertain.
More than 10% of the companies that have delisted from the JSE since 2018 hail from the construction and real estate development sectors. A side effect of this is the loss of invaluable skilled professionals to emigration or alternative industries.
Esta historia es de la edición 22 October 2021 de Finweek English.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición 22 October 2021 de Finweek English.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
