JSE won’t suspend Steinhoff as shares rebound
The JSE says it recognises the serious impact the recent disclosures by Steinhoff International regarding accounting irregularities has had on investors. However, it says that trading in its shares should be allowed to continue and will therefore not be suspended.
Steinhoff, listed in Frankfurt and Johannesburg, has lost more than 84% of its market value in the three days since the company started a probe into accounting irregularities and chief executive officer Markus Jooste resigned.
Shares in the group tumbled for five consecutive days last week before recovering slighlty in trade on Monday – up 37.83% to R8.27.
Bloomberg noted that in South Africa, Steinhoff has relationships with Standard Bank Group, Investec and a unit of FirstRand. Globally some of the lenders include Citigroup, Bank of America, HSBC Holdings and BNP Paribas.
The JSE said in a statement that it has launched an investigation to determine if there have been any breaches of its listing requirements. “This includes any breaches in relation to previous financial disclosures made to the public by Steinhoff International,” it said.
The exchange said that in applying its listings requirements, there are instances where the JSE needs to decide, in the interests of investors, whether to temporarily suspend trade on the JSE of a listed company’s shares.
The listing requirements contemplate a suspension of trading in a listed company’s shares under the following circumstances:
- If the listed company has breached the Listings Requirements and it is in the public interest to suspend the listing; or
- If it will further the objectives of the Financial Markets Act, including promoting a fair and transparent market and the protection of investors, again giving consideration to whether it will be in the public interest to suspend the trading in a listed company’s shares.
The JSE said it has been in continuous engagement with the company.
“To date, Steinhoff has disclosed as much information regarding its current financial position as it is able to, pending the release of its 2017 audited financial results”.
“The JSE considered whether a suspension of trading in Steinhoff International’s shares would be in the public interest if it could help to promote a fair and transparent market and protect the interests of investors. We believe that under the circumstances where Steinhoff International has disclosed as much price sensitive information as it is able to, it would be detrimental to the interest of investors to prevent them from trading Steinhoff International shares on the JSE.
“It should also be noted that the Frankfurt Stock Exchange has not suspended trading in Steinhoff International shares. This means that if the JSE were to suspend trading in Steinhoff International, it would place investors trading on the JSE at a disadvantage to those who are able to trade the Steinhoff International share in Frankfurt.
“Therefore, with all of the information currently at our disposal, the JSE remains of the view that Steinhoff International’s listing on the JSE should not be suspended and that trading in its shares on the JSE should be allowed to continue,” the exchange said.
Steinhoff was forced to abandon the reporting of its financial results following the resignation of its CEO.
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