Two massive knocks
BOTH Capitec Bank and Steinhoff International took a massive knock this week as their share prices dropped on the JSE with Viceroy Research at the heart of their problems.
First in the firing line was Capitec after the New York-based research group released a damning report, accusing it of operating like a loan shark.
Capitec’s share price plummeted on Tuesday after the release of the report, declining by 25.31%. But a statement from the SA Reserve Bank seemed to calm investor nerves
The stock recouped almost all of the previous day’s losses the next morning.
If Capitec had doubted Viceroy’s ability to bring the share price down, Steinhoff knew well how devastating a report from the group could be.
It watched its share price dive 85% in December and lost about
BUT CAPITEC SEEMS TO BE WEATHERING THE STORM,WRITES
SANDILE MCHUNU
R200 billion in market capitalisation just after Viceroy released its report on the retailer.
Steinhoff is yet to recover and this week its supervisory board had to face Members of Parliament to ascertain the damage caused by its admission to accounting irregularities.
Steinhoff had started the week on a positive note with the stock climbing to R7.96 a share. However, by the time it started to address MPS on Wednesday it had dropped to R6.68 a share. And the deliberations in Parliament did not help the stock to recover as it remained flat.
Instead, more casualties emerged in relation to Steinhoff, including members of the Government Employees’ Pension Fund.
The fund told Parliament that it had lost about R20bn from the collapse of Steinhoff’s share price.
It said its shares had been worth R24.1bn on November 30 and only R3.1bn by January 18.
Despite the loss, the Public Investment Corporation (PIC), which manages assets on behalf of the fund, said value could still be extracted from Steinhoff.
PIC chief executive Dan Matjila said: “We don’t believe Steinhoff is necessarily worth zero. It has some nice underlying assets.”
Steinhoff said it would consult its lawyers to see whether it could make the charges against its former chief executive Markus Jooste available to members of the committee.
Earlier in the week, Capitec, which makes unsecured loans mainly to low- and middle-income households, was accused by Viceroy of hiding write-offs by refinancing defaulted loans with new debt.
But three industry analysts have backed Capitec and accused Viceroy of publishing the report for its own gain.
Renier de Bruyn, an investment analyst at Sanlam Private Wealth, Kokkie Kooyman, a director and portfolio manager at Denker Capital and Professor Jannie Rossouw, the head of Wits University’s School of Economic and Business Sciences dismissed the report as one-sided.
It seemed Capitec has weathered the storm for now, with its share price trading higher again on Thursday, up by more than 5%. As for Steinhoff, MPS were left with more questions than answers.