Capitec fights off the Steinhoff slayer
A former social worker from middle England has suddenly become the biggest influencer in South Africa’s stock market. He called Steinhoff’s collapse correctly. In making banking sector star performer Capitec his next target, has Viceroy Research’s Fraser Perring got it right again? Or, as the bank’s leadership insist, is he a one-hit wonder?
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.