JSE stocks dragged down by African Bank

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IOL image JSE interior view INDEPENDENT MEDIA The JSE is seen in this file photo: Leon Nicholas.

Johannesburg - South Africa's stocks were led lower on Wednesday by unsecured lender African Bank whose shares plunged 60 percent after the company said it would post huge losses as it struggled with bad debt.

African Bank said it would need to raise about $800 million (R8.6 billion) as its core market of low-income borrowers came under strain from the higher cost of living, while its chief executive quit.

“They have seen that they can only lend to people that can actually pay,” said Stephen Meintjes, analyst at Imara SP Reid.

Shares in the unsecured lender reached their lowest level since listing 17 years ago, falling 60.76 percent at 2.70 rand.

The news dragged down Johannesburg's banking index down 1.65 percent.

Nedbank shed 1.48 percent to 236.54 rand while Firstrand slipped 1.47 rand to 43.58 rand.

The Top-40 blue-chip index lost 0.42 percent to 45,916 while the broader All-Share index ended 0.5 percent lower at 51,091.

On the upside, gold mining companies rose as the spot price of gold jumped on fears escalating tensions in the Ukraine could boost demand for the precious metal.

Africa's largest bullion producer, AngloGold Ashanti added 3.74 percent to 188.94 rand, while smaller rival Sibanye Gold jumped 4.95 percent to 27.16 rand.

An above-average 281 million shares changed hands, with 210 shares declining and 102 advancing, while 57 were unchanged. - Reuters

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