Steinhoff’s pain is also Wiese’s — as well as the PIC’s and pretty much all of the JSE’s
The fall of Steinhoff will affect more than a million government employees’ pensions, and a long list of unit trust and exchange-traded fund portfolios
The Steinhoff share price continued to collapse on Thursday morning, dropping another 32% to R11.95 following the wipe-out of 60% of the share’s value on Wednesday. The market value of Steinhoff has been cut by more than R150bn this week dropping to an all time low of just R76bn.
At the share price’s current, record low level there are growing questions about the status of executive chairperson Christo Wiese’s personal wealth. Just one week ago Wiese could claim to be one of the country’s wealthiest five individuals. If market speculation is correct and Wiese used debt to acquire part of his 30% stake (as at end-November) in Steinhoff, after this week’s bloodbath he may not even feature on the list of the top 100.
While Wiese looks set to suffer a massive dent to his wealth, unless Steinhoff’s supervisory board can somehow pull off a miracle and stop the share price’s nosedive, most South Africans with exposure to the JSE will be affected.
The Public Investment Corporation, which invests on behalf of the Government Employees Pension Fund, is the third largest shareholder in Steinhoff after Wiese and Deutsche Börse Asset Management. Its 8.56% stake is worth just R6.5bn today; two weeks ago it was worth R20bn. However, this should be seen in the context of a R1.8-trillion investment fund.
It’s not just the million-plus government employees who will be a little poorer today; ahead of this week’s crisis, Steinhoff was one of the 15 largest companies on the JSE, which means it is held by a wide range of unit trusts and exchange-traded fund (ETF) portfolios. According to analysis by Moneyweb, Steinhoff was the fifth most widely held share in South African equity portfolios.
The list of funds exposed include Ashburton Low Beta SA Composite Tracker Fund; Momentum Industrial Fund; Baobab BCI Flexible Opportunity Fund; NewFunds Shari’ah Top 40 Index Fund; Coronation Industrial Fund; Nedgroup Investments Opportunity Fund; Old Mutual Industrial Fund; Community Growth Equity Fund; and Stanlib Shari’ah Equity Fund.
The damage is not restricted to Steinhoff as all Wiese-related JSE companies have taken a knock.
Steinhoff’s overnight announcement that there was a question mark over the recoverability of R96bn of non-South African assets did nothing to settle market jitters, but analysts welcomed it as indication the supervisory board realised the need for a speedy resolution.
Said one analyst: "The longer they take to provide the market with an account of what has and is happening, the more uncertainty there will be and the greater the danger of contagion."