Johannesburg – Stocks fell for a second straight session on Thursday as the price of African Bank Investments plunged further on fears the lender might be unable to plug a huge deficit in its finances.
Shares of Abil, as the bank is widely known, tumbled more than 80% to almost a 20-year low of 50 cents, after falling more than 60% the previous day.
The bank, whose business model is based solely on unsecured lending, said on Wednesday it needed to raise about R8.5bn in new capital after warning of a massive annual loss, following which its chief executive quit.
“African Bank didn’t see the curve of the turn of the economy and they approached the curve at a 180 kmp/h. They should have seen the warning signs…they got it wrong,” said Martin Lentsoane, a trader at Lehumo Capital.
“When the trading statement came out yesterday [on Wednesday], it was the last straw that broke the camel’s back.”
The Top-40 blue-chip index fell 0.84% to 45 533 while the broader All-Share index lost 0.82% to 50 674.
Shares of Old Mutual fell 1.62 to 34.55 rand after the financial group said the economic fallout from mining strikes across South Africa would weigh on full-year sales.
On the upside, shares of wireless carrier MTN Group rose 2.81% to 2 23.61 rand after the company reported a rise in first-half profit, as strong demand for its high-margin data services offset slow voice growth at home.
Trade was robust with about 367 million shares changing hands compared with last year’s daily average of about 176 million shares.
Decliners outpacing advancers 197 to 94 while 64 issues were unchanged, according to preliminary bourse data.
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