Downgrade hits Absa's stock

Comment on this story

Absa Group declined as much as 3.4 percent in early trade on Friday after Morgan Stanley downgraded the shares to sell from hold.

The consumer bank fell 2.56 percent to close at R161.75. Absa, with a market value of R116 billion, has declined 1.8 percent this year, making it the worst performer on the six-member FTSE/JSE Africa banks index.

Barclays said on December 6 that it would increase its stake in Absa to 62.3 percent from 55.5 percent and combine its African operations with Absa to boost growth on the continent.

Since the UK bank announced it would buy 129.5 million Absa shares, the local bank’s stock has gained as much as 12 percent.

“We now see the shares as fully valued, discounting both the special dividend impact and the price paid for the deal,” Greg Saffy, the banks analyst at Morgan Stanley’s South African joint venture, said.

There was scope for a special dividend of about R7.50 a share, he said. – Bloomberg


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.