JSE lists Berkshire Hathaway Single Stock Future

South African investors can now trade one of the world’s most successful investment companies through the listing of a single stock future (SSF) on Warren Buffet’s company Berkshire Hathaway, without using their R2m foreign allowance.

Berkshire Hathaway is a holding company listed on the New York Stock Exchange with headquarters in Omaha, Nebraska, USA. The company’s core business is insurance, including property and casualty insurance, reinsurance and specialty nonstandard insurance. It also owns a diverse range of businesses from sweet manufacturers and jewellers, to several regional electric and gas utilities.

“Like the other international derivatives (IDX) listed on the JSE, the Berkshire Hathaway SSF can be purchased through any JSE-registered broker in the same way one would purchase local derivatives products. This offers investors hassle-free international exposure cost effectively on a trusted trading platform with none of the counter-party risk associated with over-the-counter trading,” comments Allan Thomson, Head of Derivatives Trading at the JSE.

“With this listing the JSE is able to offer South African investors increased opportunities for portfolio diversification through exposure to world class companies”, says Adam Myers, Head of Equity Derivatives at Investec.

The other IDX products trading on the JSE currently include blue chip companies such as Nokia, LVMH Moet Hennessy Louis Vuitton, BP, Vodafone, GlaxoSmithKline and Apple.

While retail investors and corporate entities do not have any exchange control restrictions, institutional investors do have to comply with foreign portfolio regulations. Contracts are priced and settled in Rands. If the Rand depreciates, then the local investor will benefit, allowing IDX products to be used as a rand hedge.

The JSE will charge an initial margin of R50 000 per Berkshire Hathaway contract, but this excludes brokerage charges.