South African property stocks fell the most in more than two years on speculation that some of the companies are overvalued and might be named in a negative research report that is yet to be published.
The 21-member FTSE/JSE Africa Listed Property Index plunged as much as 8.5%, the biggest drop since December 2015, before paring losses to trade 2.3% down by 11:36 am in Johannesburg on Thursday. Resilient REIT plummeted as much as 22%, a record decline, before trading 4.7% lower. Greenbay Properties, Fortress REIT -B and Nepi Rockcastle all recovered from declines of as much as 20%.
Rumors that Viceroy Research will be releasing a report on a South African property stock are fueling the losses, according to David Shapiro, deputy chairman of Sasfin Wealth in Johannesburg. Viceroy, who refers to itself as a U.S.-based short-seller, published a report highlighting some of Steinhoff International Holdings NV’s challenges shortly after the retailer announced it is investigating accounting irregularities that led to the resignation of its chief executive officer and chairman.
“Traders are taking advantage of it and plugging the market without really applying common sense,” Shapiro said. The real estate counters “are overvalued, but so is our market. We’ve got a hothouse of debt. Everyone is now panicking.”
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