JSE closes flat as Steinhoff rebounds while banks retreat
The JSE closed just about flat on Monday as banks and retailers retreated on the weaker rand, but Steinhoff recovered in volatile trade.
Banks and financials were hard hit in risk-off trade ahead of a probable interest-rate increase by the US Federal Reserve on Wednesday.
Global miners shrugged off mixed commodity prices, benefiting from a weaker rand during the course of the day, while Brent crude had lifted 0.9% to $63.9 a barrel by the JSE’s close.
Steinhoff shares were in demand on Monday. This followed an announcement by the group that it was focused on safeguarding operational liquidity to continue funding existing operations throughout its subsidiaries.
The group said it intended to get assurances from banks that entailed continued support for existing facilities from all its lenders, to achieve "an immediate stabilisation of the group’s financing".
Speculation that the troubled group was set to sell Pepkor, or distance itself from Steinhoff Africa Retail to save the group, was way too premature, said Capicraft Investment Partners analyst Drikus Combrinck. "People are getting ahead of themselves, as there are no quick answers at this stage."
Combrinck said it was important to differentiate between Steinhoff as a company and an investment, and retail tycoon and anchor shareholder Christo Wiese’s personal stake in the company. "Steinhoff has many good businesses, which may be sold to keen buyers, depending on what creditors demand."
Combrinck said Wiese’s personal position was more tricky, as he would probably have to lose control over Steinhoff to stave off bankruptcy. "The best step for him would be to stabilise the group through a deal with banks and creditors, and then relinquish control when the share price has recovered."
But even then, Wiese may face further problems due to the huge extent of short positions on Steinhoff shares, said to be more than 40%, according to reports. "The holders of short positions will be keen to sell at a higher price than last week’s rout, which may put renewed pressure on Steinhoff," Combrinck said.
It was earlier reported that Wiese borrowed 628-million Steinhoff shares in 2016 as security for a loan of $1.8bn from top global banks to increase his stake in the group.
Technology group EOH rose 20% in intraday trade, but pared some of those gains toward the close. It earlier appointed law firm ENS Africa to conduct a full fact-finding review of some of the group’s investments.
The all share closed 0.03% off at 57,997.30 points while the blue-chip top 40 gained 0.08%. Banks shed 2.72%, food and drug retailers 1.56%, general retailers 1.4% and financials 1.1%. The gold index added 1.47% and resources 1.27%.
Anglo American gained 1.14% to R250.89.
Barclays Africa shed 4.13% to R150.50 and Standard Bank 2.82% to R171.44.
Investec plc gained 2.32% to R86.97. The group said earlier it had credit exposure to Steinhoff, but was not expecting any losses.
Sanlam dropped 1.87% to R76.62. The group has exposure to Steinhoff bonds.
Steinhoff ended the day 55.83% higher at R9.35, while Steinhoff Africa Retail shed 4.23% to R16.76.
Shoprite lost 2.01% to R212 and Pick n Pay 2.05% to R64.89.
EOH rose 8.54% to R51.58.
Nepi Rockcastle added 0.98% to R213.
Life Healthcare dropped 2.67% to R25.86.