COMPANY COMMENT
Truworths’s top 40 exit another blow for shareholders
Naspers unbundling MultiChoice pushed Truworths off the rack
Retailer Truworths’s unceremonious dumping from the JSE’s top 40 index is yet another blow for a company that has shed 16% of its value so far this year. The unbundling of MultiChoice from Naspers on Thursday resulted in the subscription TV service listing with a market capitalisation of R46.5bn, easily eclipsing Truworths’s R33bn and seeing the clothing retailer ousted. In the short term, this will result in a rebalancing by tracker funds, which will automatically sell stock in Truworths as they will be required to dispose of shares that are not in the top 40 index. It will also not benefit from automatic buying from passive investment vehicles. Although this is not ideal for the retailer, over the longer term it will likely adjust as active investors looking for underlying value will still pour in. SA retailers are under severe strain as tepid economic growth and government tax hikes drain consumer spending. Truworths’s share price loss this year is bigger than the JSE’s general r...
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