Arqaam Capital, an emerging market-focused brokerage house based in Dubai, is shutting its South Africa office as the investment bank follows in the footsteps of other global equity research companies paring back operations in the continent's financial-markets hub.
In a message to clients, Arqaam, which also has offices in Beirut and Cairo, said it would be closing its Johannesburg office and immediately withdraw recommendations, target prices and estimates. Arqaam employs about 17 people in the city, Bloomberg first reported.
Arqaam said it will focus on markets where it has a stronger presence. "This decision enables the investment bank to deploy additional capital in its core markets of the Middle East and North Africa region and comes as part of an effort to sharpen its focus on where it has a competitive franchise and a growing market share," it said.
This decision enables the investment bank to deploy additional capital in its core markets of the Middle East and North Africa region"
The shutdown by Arqaam, which focuses on emerging markets, follows an announcement by Macquarie Group in October 2019 that it's closing its cash-equities business in South Africa. Deutsche Bank's South African unit has made significant job cuts, while Credit Suisse Group has also reduced its presence in the country.
Similarly, Citigroup has been leaving some equity research posts vacant and moving other functions.
Profit margins for equity-trading companies that offer research have been squeezed in South Africa and other markets by the cost of MIFid II regulations, as well as a shift toward passive investing and a fall in trading volumes. The JSE has roughly 300 fewer companies listed than it did two decades ago.