JOHANNESBURG - South Africa’s benchmark stock index fell the most this year following the resignation of CEO Marcus Jooste.
Jooste resigned with immediate effect after the company reported discrepancies in its accounts and announced an external inquiry.
Declines in Steinhoff related companies and those linked to billionaire shareholder Christo Wiese added to the slump.
The FTSE/JSE Africa All Share Index dropped a second day, falling as much as 1.9%, the most intraday since Dec. 15, 2016.
It was 1.8% lower at 57,933.36 by 14:26 in Johannesburg. Steinhoff plummeted as much as 70%, after CEO Markus Jooste quit, contributing most to the index’s weakness.
Companies that tumbled:
- Unit Steinhoff Africa Retail Ltd. tumbled 41 percent as its CEO also stepped down.
- Shoprite Holdings Ltd., controlled by Steinhoff Africa Retail, fell 4.1 percent.
- Kap Industrial Holdings Ltd. and PSG Group Ltd., both part-owned by Steinhoff, dropped by 8.9 percent and 7.6 percent respectively.
- Brait SE, which has Wiese as its largest shareholder, slipped 6.4 percent.
While further declines in Naspers Ltd. are weighing on the index Wednesday, “We’re definitely seeing some contagion from other Christo Wiese and Markus Jooste-related stocks, which is not helping,” Simon Brown, a trader at Just One Lap told Bloomberg.
Coronation Fund Managers Ltd. dropped 9.1 percent, according to Bloomberg. The money manager, which holds a 4.8% stake in Steinhoff, according to data compiled by Bloomberg, traded without the right to the latest dividend Wednesday.
Naspers, the largest benchmark component, was 2.5% lower after Tencent Holdings Ltd., in which it owns a third, fell 2.7% in Hong Kong. “This is going horribly pear-shaped, very quickly,” Brown said to Bloomberg.
“There’s been a lot of smoke around the company, with accusations in Europe and the like, on sales and also accounting practices. Even if at the end of the day they are exonerated and everything is fine, it’s going to take time -- and by time, it’s probably going to be measured in years for the process to go through, for reputations to be restored," Brown said.
- BUSINESS REPORT ONLINE