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As Cyril Ramaphosa ascends to the presidency in early 2018, not everyone in South Africa is partying. Former president Jacob Zuma’s resignation in mid February has unleashed a burst of optimism about South Africa among emerging market currency investors.
In the stock market, however, the talk is just as much about the spread of an activist short-selling onslaught moving from one of the titans of South African business, Steinhoff International Holdings, to a cornerstone of its financial sector, Capitec Bank.
Viceroy Research heralded a 60% decline in Steinhoff’s share price late last year when it released a stinging report on the international retail group the day after the resignation of chief executive Markus Jooste over accounting irregularities.
Now, in targeting Capitec, the short-sellers – Viceroy Research again – are questioning the ethics and stability of South Africa’s banking system, a rock in the country’s corporate fortunes.
Johannesburg and Frankfurt-listed Steinhoff is now infamous in the global capital markets after international banks wrote off loans to the group, totalling billions of euros, that had funded its global acquisition spree.
