South African regulators are scrutinizing trades prompted by speculation that Viceroy Research will release a negative report about one of the country\u2019s stocks,<\/p>\n
The Financial Services Board is working with the Johannesburg Stock Exchange to review trading activity and determine whether a formal probe is warranted, Tembisa Marele, a spokeswoman for the Pretoria-based FSB said in an emailed response to questions.<\/p>\n
The FSB\u2019s mandate includes probing insider trading, price manipulation and false reporting.<\/p>\n
Shares of some of the country\u2019s largest real estate investment trusts fell by a record on Thursday as talk swirled that one of them will be targeted in Viceroy\u2019s next research report.<\/p>\n
Aspen Pharmacare Holdings Ltd, Africa\u2019s biggest drugmaker, plunged on 9 January amid rumors it is in Viceroy\u2019s sights.<\/p>\n
The stock has since recovered all those losses after Aspen Chief Executive Officer Stephen Saad came out in defense of his company, saying its earnings are transparent.<\/p>\n
Very little is known about Viceroy,\u00a0which refers to itself as a U.S-based short-seller, or the people behind it, who describe themselves on their website as \u201ca group of individuals who see the world differently.\u201d<\/p>\n
Viceroy gained attention in South Africa after releasing a report detailing some of Steinhoff International Holdings NV\u2019s woes shortly after the retailer said it was investigating accounting irregularities that caused most of its value to be wiped out.<\/p>\n
Advise Caution<\/strong><\/p>\n \u201cViceroy encourages people not to speculate on the identity of any companies we are researching and we advise caution in trading on gossip,\u201d the company said in a statement, issued from a Gmail account.<\/p>\n \u201cViceroy complies with the laws and does not release research or discuss our focus prior to publication.\u201d<\/p>\n The 21-member FTSE\/JSE Africa Listed Property Index plunged the most since December 2015 before paring losses to trade 2.1% down by 2 p.m. in Johannesburg on Thursday. Resilient REIT Ltd. plummeted by record 22% before trading 3.3% lower. Greenbay Properties Ltd, Fortress REIT Ltd.-B and Nepi Rockcastle Plc all recovered from declines of as much as 20%.<\/p>\n \u201cNobody knows who Viceroy is,\u201d\u00a0said David Shapiro, deputy chairman of Sasfin Wealth in Johannesburg. \u201cThey\u2019re an anonymous bunch of people; they may be absolutely 100% right, on the other hand they could be 100% wrong.\u201d<\/p>\n Traders are taking advantage of the rumors \u201cand plugging the market without really applying common sense,\u201d he said. The real estate counters \u201care overvalued, but so is our market. We\u2019ve got a hothouse of debt. Everyone is now panicking.\u201d<\/p>\n \u2018Wrong Side\u2019<\/strong><\/p>\n Steinhoff has lost more than 80% of its value since the owner of France\u2019s Conforama, Mattress Firm in the U.S. and Pep in South Africa said there were anomalies with its numbers on 5 December.<\/p>\n \u201cThe market is going through each company with a fine-tooth comb at the moment,\u201d said Petri Redelinghuys, founder of Johannesburg-based stockbroker Herenya Capital Advisors.<\/p>\n \u201cFollowing the Steinhoff collapse no one wants to be caught on the wrong side of that. It\u2019s actually insane what\u2019s going on with a company that can fall as much as 20% and then recover within three or four hours.\u201d<\/p>\n Following the stock\u2019s initial steep decline, Fortress said on Thursday it anticipates increasing its interim dividend for each B share by as much as 15.5%.<\/p>\n \u201cTrading in the current financial year has been consistent with the prospects previously communicated to shareholders,\u201d the property company said.<\/p>\n A representative for Resilient said its stock was moving on market speculation of the possible Viceroy report, adding that the real estate investment trust hasn\u2019t been contacted by the research firm.<\/p>\n Calls to Greenbay\u2019s offices weren\u2019t immediately answered. Nepi Chief Financial Officer Mirela Covasa said the company is looking into why its shares are declining.<\/p>\n
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