Shares in South Africa’s banking index extended losses on Monday as investors continued to digest the competition watchdog’s recommendation that banks should be fined for rigging the rand currency.
South Africa’s Competition Commission said last week it had found that more than a dozen local and foreign banks including Barclays Africa (Absa) and Standard Bank colluded to coordinate trading in the South African and U.S. currencies.
The Johannesburg Stock Exchange’s banking index extended losses to 1.54 percent to 7,473 points by 1200 GMT, its lowest level since Feb. 10, before the forex rigging announcement.
“There is more and more concern about what has happened with these banks colluding on this rand trading that took place,” said Cratos Capital equities trader Greg Davies. “It might be investors deciding to sell their shares in case there are very big fines from the authorities.”
In the case of the alleged rigging of the rand, the antitrust watchdog said it had recommended fines amounting to 10 percent of the banks’ South African annual revenues to the country’s Competition Tribunal, which adjudicates on the commission’s findings.
Details of Finance Minister Pravin Gordhan’s budget speech on Wednesday will also be the next likely trigger for price moves, trader at Global Trader Paul Chakaduka said.
“Leading up to the budget we should see pressure on the financials without a doubt,” Chakaduka said.
(Reporting by Nqobile Dludla; Editing by Ed Stoddard)