Prop­erty shares sink on ru­mour

JSE to probe ‘ad­verse re­port’

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

THE JSE IS pre­par­ing to take ac­tion after some listed prop­erty shares went into a brief tail­spin yes­ter­day amid ru­mours that a ma­jor JSE prop­erty counter was in­cluded in an ad­verse re­port by New York re­search group, Viceroy Re­search.

The tank­ing of the FTSE/ JSE Africa-listed prop­erty in­dex, with some shares fall­ing nearly 30 per­cent in the morn­ing, comes in the same week that Africa’s big­gest phar­ma­ceu­ti­cal com­pany, Aspen, was hit by sim­i­lar mar­ket spec­u­la­tion on the JSE that it might be a tar­get of Viceroy Re­search, send­ing its shares south.

Viceroy Re­search exposed Stein­hoff ’s ac­count­ing shenani­gans last year.

Green­bay Prop­er­ties led the rout in the morn­ing by los­ing al­most 30 per­cent, but re­cov­er­ing later and clos­ing 5.33 per­cent lower on the JSE at R2.13 a share. A sim­i­lar fate be­fell Fortress Reit A, which closed even­tu­ally 0.44 per­cent down at R17.95, while Fortress Reit B fell 1.98 per­cent to close at R35.20. Nepi Rock­cas­tle closed 5.15 per­cent at R150 a share, after be­ing down al­most 30 per­cent in the morn­ing.

The JSE’s director of mar­ket reg­u­la­tion, Shaun Davies, said yes­ter­day that as part of the JSE mar­ket reg­u­la­tion divi­sion’s rou­tine sur­veil­lance pro­ce­dures, it was re­view­ing the trad­ing ac­tiv­ity in the shares due to the ma­te­rial price move­ments in re­cent days that ap­pear to be un­re­lated to any in­for­ma­tion dis­sem­i­nated by the rel­e­vant com­pa­nies.


“If our re­view of the trad­ing in­di­cates that it would be nec­es­sary to es­tab­lish the source of any price sen­si­tive in­for­ma­tion that may have been dis­trib­uted among in­vestors and whether such in­for­ma­tion was fac­tu­ally cor­rect, we will ad­vise the Di­rec­torate of Mar­ket Abuse (DMA) at the Fi­nan­cial Ser­vices Board (FSB) ac­cord­ingly for them to con­sider con­duct­ing fur­ther in­ves­ti­ga­tions,” he said.

Davies added that if the Mar­ket Reg­u­la­tion Divi­sion’s re­view of trad­ing ac­tiv­ity iden­ti­fied any po­ten­tial price ma­nip­u­la­tion, the JSE would ad­vise the DMA ac­cord­ingly.

“We can only con­sider po­ten­tial in­sider trad­ing if price sen­si­tive in­for­ma­tion re­gard­ing a listed com­pany is pub­lished and it ap­pears that one or more in­vestors had ac­cess to that in­for­ma­tion be­fore it was pub­lished and traded on it.”

FSB spokesper­son Tem­bisa Marele con­firmed that the body was en­gag­ing with the JSE on the mat­ter.

“This en­gage­ment with the JSE will de­ter­mine what case if any, the FSB ought to look into,” she said.

Viceroy Re­search which de­scribes it­self “as a group of in­di­vid­u­als that see the world dif­fer­ently” , said yes­ter­day it took its re­search seriously.

“Viceroy en­cour­ages peo­ple not to spec­u­late on the iden­tity of any com­pa­nies we are re­search­ing and ad­vise cau­tion in trad­ing on gos­sip. Viceroy com­plies with the laws and we do not spread gos­sip about our re­search prior to pub­li­ca­tion,” it said.

In its re­cent re­search on Stein­hoff, Viceroy said at least a vast ma­jor­ity of “loans and in­vest­ments” is­sued by Stein­hoff were used to fund an off-bal­ance sheet en­tity’s pur­chase of loss-mak­ing Stein­hoff sub­sidiaries. It also said that these off-bal­ance sheet en­ti­ties were used to ob­scure losses, in­flate earn­ings and on one oc­ca­sion, round-trip a preda­tory loan is­suer. “Their ex­is­tence brings into ques­tion the real na­ture of Stein­hoff’s earn­ings power,” it said.

Chris Gil­mour, an in­de­pen­dent an­a­lyst, said it came as no sur­prise that the prop­erty stocks had dived.

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