JSE Direct with Simon Brown

Podcast: Suspended, now what?

In JSE Direct, Latest by Simon Brown

Simon Shares

  • Solid Stor-Age (JSE code: SSS) results from a stock I have largely ignored and been wrong about.
  • Interesting TymeBank presentation from African Rainbow Capital (JSE code: AIL).
  • Lonmin (JSE code: LON) is gone, taken over by Sibanye Gold (JSE code: SGL). Lonmin has a consolidation adjusted all time high of over R33,000, exiting at 1480c. They also had a US$10billion offer in August 2008 that they rejected. Market cap now, R4billion or about US$265million.

 

Lonmin

Suspended

  • Tongaat (JSE code: TON) suspended.
  • Choppies (JSE code: CHP) suspended.
  • Group5 (JSE code: GRF) suspended.
  • Rockwell Diamonds (JSE code: RDI) suspended.
  • Basil Read (JSE code: BSR) suspended.
  • Esor (JSE code: ESR) suspended.
  • Firestone Energy (JSE code: FSE) suspended.
  • Freedom Property Fund (JSE code: FDP) suspended.

I’ll stop there because you get the picture, I want to talk of the warnings signs, why they get suspended and what hope is there for the future.

The why?

  • Business rescue
  • Breach f JSE listing rules, such as late results
  • Request from the company
  • Sensitive information leaked into the market

Now what?

Depends on the why, many do eventually come back but battered and bruised. For now you’re unable to sell (or buy) any shares and will have to wait for the listing to resume.

How long?

Usually way longer than management promise. If it’s business rescue then it’s probably forever. late results eventually they get it together, but it takes time, lots of it. Sensitive information is usually fairly quick to return to the market.

How to avoid holding a suspended share?

Watch for those late results. The JSE gives three months but then always gives an extra month, so effectively four. If a stock can’t publish results within four months then why do you own it?

What about derivative traders with open positions?

You’re in a heap of pain. Either long or short you now can’t get out and the best advice is to avoid trading stocks due to single event risk such as a share being suspended.

Steinhoff?

Why isn’t Steinhoff (JSE code: SNH) suspended? Because they also trade on the German exchange and they have seriously lax rules, so they don’t suspend. Suspending Steinhoff locally when it still trades in Europe would prejudice local shareholders.



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JSEDirect is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

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