Viceroy report: No retreat in Capitec short selling

JOHANNESBURG – The number of shares sold short in Capitec has remained the same, proving resistance to the bank’s detailed responses to Viceroy Research’s allegations that its books were not in order and setting them right would require that the Reserve Bank place it under curatorship.

Between 1% and just less than 5% of Capitec’s 115.6-million issued shares were out on loan to investors who then sold them on, betting on a plunge in the bank’s share price, on Friday. The short positions were worth R4.8 billion at Friday’s market prices.

Andre du Plessis, Capitec financial director said the short positions were normal and did not necessarily originate from Viceroy’s report.

“Short positions can be taken at any moment and will always be present in the market. People differ in their outlook on the future and on market players.”

Not every market participant bought shares in the hope they would increase in value, or shorted them betting they would lose value. “You get guys in hedge funds who trade pairs- so, long FirstRand and short Nedbank, for examples- and they are playing the spread of what happens to the market or currency, they are effectively market-neutral and they run their own strategies on that,” said Juan Breytenbach, a trader at Capilis Asset Managers in Johannesburg.

Capitec released its last statement on Thursday, which placed all of its responses to the Viceroy report.

Photo Credit- Bloemfontein Courant

 

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