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Johannesburg - MTN’s [JSE:MTN] share price gained almost 10% on the JSE on Thursday, even though the company announced its first loss in 20 years.
MTN was by far the biggest story on the JSE. Shortly after the opening, more than 5 million shares were already sold in more than 4 000 deals for more than R653m - more than twice as much as any other share.
By mid-morning the share price was already 9.52% higher at R128.15, with investors starting to buy the stock as all the bad news about the company’s business in Nigeria seems to be discounted now.
MTN was supported by positive sentiment on the JSE with all major indices higher by mid-morning, although some of the gains were quite modest. Besides MTN, financial shares were the best performers with the Financial index 0.92% higher by mid-morning.
The All-share index was at that stage 0.32% stronger at 51 846 points, while the Top 40 index was 0.31% up at 44 814 points. The Resources index, which made a strong run on Wednesday, gained 0.17% and the Industrial index was 0.11% higher.
Investors were hoping that MTN’s proposed listing on the Nigerian Stock Exchange could help regain goodwill among Nigerians and make it less vulnerable to regulatory crackdowns,
MTN announced it has appointed advisers to help with the listing, which will probably take place later this year. It agreed on the move as part of a deal to reduce a regulatory fine originally set at $5.2bn for missing a deadline to cut off unregistered SIM cards.
The fine was later reduced to $1.1bn but it still had a devastating effect on the company’s results, as it wiped out R10.5bn ($768m) - 500 cents per share - from headline earnings. MTN said its headline loss came in at R1.4bn or 77c/share in the year to end-December, compared with headline earnings of R13.6bn or 746c/share a year earlier.
READ: MTN suffers first financial loss in 20 years
MTN’s share price has been on a steady decline since September 2015 when it reached a high of R249, and is now 17.3% lower over the past year and 40% weaker over the past three years.
Nigeria is MTN’s most lucrative but increasingly problematic market. The company is under investigation by Nigerian lawmakers for allegedly illegally repatriating $14bn between 2006 and 2016. MTN has denied any wrongdoing.
Besides MTN, financial shares were the busiest on the JSE and Standard Bank [JSE:SBK], FirstRand [JSE:FSR] and Rand Merchant Insurance Holdings [JSE:RMI] were among the top five shares in terms of volume.
The banking shares took their lead from Wall Street which reached yet another record on Wednesday, with banking shares performing strongly on expectations that US interest rates may be hiked soon.
Standard Bank, which was appointed as one of the advisers for MTN’s proposed listing in Nigeria, traded 4.18% higher at R152.50. FirstRand was 1.85% stronger at R51.31 and Barclays Africa [JSE:BGA] gained 1.19% to R157.10. Nedbank [JSE:NED] was only 0.96% stronger at R253.42.
Capitec [JSE:CPI] reached a new 52-week high of R732.53, 0.72% higher than the previous day’s close. In earlier trade the share was however more than 4% higher at R741.26. Capitec gained more than 38% over the past year.
Rand Merchant Insurance Holdings was 2.61% stronger at R41.10 and Old Mutual [JSE:OML] lost 0.45% to R35.08.
Anheuser-Busch InBev [JSE:ANH], the world's largest brewer, lost 1.77% to R1 408.50 after it reported weaker than expected earnings due to a beer sales slump in Brazil. The company however raised its forecast for savings and benefits from its SABMiller takeover to $2.8bn from $2.45bn.
READ: AB InBev eliminates bonuses as earnings trail estimates
Naspers [JSE:NPN] was 0.60% softer at R2 1291.10.
