JOHANNESBURG - The JSE IS preparing to take action after some listed property shares went into a brief tailspin yesterday amid rumours that a major JSE property counter was included in an adverse report by New York research group, Viceroy Research.
The tanking of the FTSE/JSE Africa-listed property index, with some shares falling nearly 30percent in the morning, comes in the same week that Africa’s biggest pharmaceutical company, Aspen, was hit by similar market speculation on the JSE that it might be a target of Viceroy Research, sending its shares south.
Viceroy Research exposed Steinhoff’s accounting shenanigans last year.
Greenbay Properties led the rout in the morning by losing almost 30percent, but recovering later and closing 5.33 percent lower on the JSE at R2.13 a share. A similar fate befell Fortress Reit A, which closed eventually 0.44percent down at R17.95, while Fortress Reit B fell 1.98percent to close at R35.20. Nepi Rockcastle closed 5.15percent at R150 a share, after being down almost 30percent in the morning.
The JSE’s director of market regulation, Shaun Davies, said yesterday that as part of the JSE market regulation division’s routine surveillance procedures, it was reviewing the trading activity in the shares due to the material price movements in recent days that appear to be unrelated to any information disseminated by the relevant companies.
Manipulation
“If our review of the trading indicates that it would be necessary to establish the source of any price sensitive information that may have been distributed among investors and whether such information was factually correct, we will advise the Directorate of Market Abuse (DMA) at the Financial Services Board (FSB) accordingly for them to consider conducting further investigations,” he said.
Davies added that if the Market Regulation Division’s review of trading activity identified any potential price manipulation, the JSE would advise the DMA accordingly.
“We can only consider potential insider trading if price sensitive information regarding a listed company is published and it appears that one or more investors had access to that information before it was published and traded on it.”
FSB spokesperson Tembisa Marele confirmed that the body was engaging with the JSE on the matter.
“This engagement with the JSE will determine what case if any, the FSB ought to look into,” she said.
Viceroy Research which describes itself “as a group of individuals that see the world differently” , said yesterday it took its research seriously.
“Viceroy encourages people not to speculate on the identity of any companies we are researching and advise caution in trading on gossip. Viceroy complies with the laws and we do not spread gossip about our research prior to publication,” it said.
In its recent research on Steinhoff, Viceroy said at least a vast majority of “loans and investments” issued by Steinhoff were used to fund an off-balance sheet entity’s purchase of loss-making Steinhoff subsidiaries. It also said that these off-balance sheet entities were used to obscure losses, inflate earnings and on one occasion, round-trip a predatory loan issuer. “Their existence brings into question the real nature of Steinhoff’s earnings power,” it said.
Chris Gilmour, an independent analyst, said it came as no surprise that the property stocks had dived.