ON THE MONEY
STUART THEOBALD: Capitec right to choose transparency with Viceroy taking a closer look
Viceroy’s thorough spotlight may end up making Capitec a much better, more transparent bank
One investor may not be that impressed with the Ramaphosa rally in local financial markets: short seller Viceroy, which struck a new blow in its fight with unsecured lender Capitec last week. The small US-based investment house has grabbed many headlines after declaring Capitec "uninvestable" and taking a short exposure to profit from falls in its share price. The Ramaphosa rally, however, has seen the rand strengthen and stock prices rise. Last week the rand strengthened 3% and the JSE’s top 40 index rallied 5%. Meanwhile, the Capitec share price fell 1.6%, but rand strength means it increased in dollar terms, potentially leaving Viceroy out of money. If Viceroy has its wits about it, it would have been careful to manage risk exposures. It could have complemented the short position in Capitec with a long exposure to the top 40 index to protect itself against an overall market rally.It could have added a partial currency hedge, though the top 40 tends to be a natural hedge of the cu...
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