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Johannesburg - The possibility that the shares in African Bank Investments [JSE:ABI] (Abil) can become totally worthless is a real possibility as investors continued to dump the shares at any price on Thursday. At one stage Abil dipped as low as 28c.
A once proud company with a market capitalisation of R60bn was worth only R1.3bn on Thursday as investors sold another 104 million shares in more than two thousand deals at any price they could get.
By midday on Thursday the share price dropped another 66.3% to just 91c, after starting on Wednesday at R6.80. In the previous session the price dropped by 60% to R2.70, but at one stage on Thursday, the share price dropped as low as 28c before bargain hunters stepped in.
A few years ago Abil traded just below R40 and as recently as October last year it still reached a 52-week high of R19.20. The share price is now 81% down for the year.
With so much negativity around the rest of the market was also marginally lower with the Financial index again the biggest loser.
By midday the All-share index lost 0.52% to 50 827 points and the Top 40-index was 0.51% lower on 45 681.
The stampede to sell Abil’s shares started on Wednesday after the news that the company expected a loss of R6.4bn and would need a rights issue of more than R8bn to restore its capital base. Leon Kirkinis, the CEO who was with the bank for 23 years, also resigned.
The attention shifted on Thursday to the possibility that the bank’s shareholders will not support the rights issue to rescue the bank and that it will have to be bailed out by someone else. The PIC, one of the two biggest shareholders, on Wednesday described Abil as a bottomless pit.
Abil does not hold any deposits, but issued some preference shares of which some will have to be refinanced pretty soon.
The Financial index, which was sharply down on Wednesday, lost another 0.84% with the share prices of the four big banks all lower, although only Standard Bank [JSE:SBK] lost more than 1%.
Abil’s problems with bad debt, which brought the bank group to its knees, has put the spotlight on the difficult conditions all banks do business in with consumers under severe financial stress and battling to pay their debt.
Standard Bank was the biggest loser dropping 1.18% to R142.06 and Nedbank [JSE:NED] was 0.97% lower on R234.25. Barclays Africa [JSE:BGA] traded 0.36% lower on R167.01 and FirstRand [JSE:FSR] lost 0.41% to R43.45.
But it was not only bad on Thursday. The MTN Group [JSE:MTN] announced solid interim results with the Ebitda up 19%, headline earnings 9% higher and the revenue 10% better. The revenue from South Africa decreased with 7%, but growth of 21% in income from Nigeria more than compensated for the weaker South African performance.
The cellphone group also reported a strong rise in the income from mobile data and Mobile Money subscribers.
The share price increased with 3.1% to R224.24 as 2.85 million shares changed owners at a value of R640m in more than 5 000 transactions.
