No suspension on JSE yet for volatile Steinhoff 'penny stock'

Steinhoff is in breach of the JSE’s listing requirement as it has failed to publish its 2016/2017 financial statements. (Gallo)

Steinhoff is in breach of the JSE’s listing requirement as it has failed to publish its 2016/2017 financial statements. (Gallo)

Beleaguered global retailer Steinhoff’s share price dived by 5.2% to R1.99 at 12:08 on Friday.

It previously touched similar levels at the end of April, but the JSE is holding tight for now and will not suspend trading.

“A 6% intra-day movement in the share price is not unusual for Steinhoff in the current environment. Therefore whilst the JSE Market Regulation Division noted today’s price movement, it does not give the JSE cause to suspend trading in the share,” Shaun Davies, director market regulation at the JSE, said via email.

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Founder and director of investment website JustOneLap.com Simon Brown said these dips are to be expected in Steinhoff’s share price, as the stock is very volatile - “it’s literally a penny stock”.

A R178-billion revaluation of an asset held by Steinhoff Investments could be scrutinised as PricewaterhouseCoopers probes the company, according to a Business Day report on Friday.

Brown said that this could have contributed to the weakening of Steinhoff’s share price.

“Every time there’s bad news about Steinhoff, and there hasn’t been good news in a long time and we probably won’t get good news for a while…I’m not sure how much lower [the share price] can go”.

Brown added that he is opposed to the JSE suspending Steinhoff’s listing as its primary listing is in Frankfurt, Germany where it continues to trade and this will prejudice South African investors.

“There’s a lot that we don’t know, but we are all in the same boat,” Brown said, referring to the financial statements dating back to 2014 which will need to be re-stated.

The JSE has previously said that it will follow Frankfurt’s lead in suspending Steinhoff’s share.

READ MORE: Steinhoff dances to zombie drums

Steinhoff is in breach of the JSE’s listing requirement as it has failed to publish its 2016/2017 financial statements. However, the Frankfurt Stock Exchange doesn’t suspend companies for late publication of results.

The international retailer’s share price was also down 5.04% to €0.13 at 12:08 on Friday.

Since December 2017 and the sudden resignation of Steinhoff’s CEO Markus Jooste amid an accounting scandal, the group’s share price has fallen by over 95%, wiping out over R200-billionn in market capitalisation.

Steinhoff closed 8.1% lower on the JSE at R1.93 on Friday. — Fin24

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