JOHANNESBURG (Reuters) – South African stocks were on the back foot on Wednesday as skittish investors holding stock in Tiger Brands and MTN Group were unnerved by bad news from both firms.
Tiger Brands lost 4.5 percent after saying executives at its Kenyan business had tinkered with figures to reflect a rosier picture of the operation.
South Africa’s biggest consumer foods manufacturer also reported flat half-year earnings as a currency devaluation in Nigeria caused foreign exchange losses at its unit there.
As with many South African companies, Tiger Brands has been expanding into other African countries hoping to tap into a vein of growing incomes on the continent.
“When you want to enlarge your business, you can do it slowly or you can do it fast. When you do it fast, there’s far more risk of getting something wrong, and executing it poorly and making an acquisition that turns out to be bad,” said one analyst in Cape Town, who declined to be named. “Tiger took the more aggressive approach and it appears to be coming back to bite them.”
Telecoms provider MTN also had its own share of troubles as 2,000 unionisable employees went on strike for better pay. It lost nearly 3 percent to 228.83 rand, its biggest daily percentage decline in about two months.
Overall, Johannesburg’s bluechip companies ticked lower with the Top-40 index down 0.3 percent to 47,994. The wider All-share shed 0.2 percent to 54,192.
The gold producers’ index fell 2.6 percent, its lowest in two months, as spot prices struggle to break out of a $1,175-$1,125 an ounce range they have been stuck in since mid-February.
Gold Fields lost the most value after shaving off 3.8 percent to 41.75 rand, although technical analysis shows it is approaching oversold territory.
Brait weighed on the opposite of the scale after adding 4.5 percent, its fourth consecutive gain since announcing a $1.2 billion acquisition of British budget clothes retailer New Look.
Activity was fairly brisk with more than 193 million shares traded, above last year’s daily average of 183 million.