Telkom share break-out rings market alarms
On an average day, more than 1 million Telkom shares are traded. During the last few days of August there was what is referred to as a "break-out" from this average pattern. On August 30, 2.5 million shares were traded and 3 million the following day.
Break-outs are reasonably common on the JSE and can generally be explained by something benign, such as a large institutional trader wanting to implement a portfolio strategy. This could involve either selling or buying a large block of shares.
But the break-out trading in Telkom shares at the end of August has sparked some concern in the market.
It commenced two trading days before a Sunday Times article speculated that there might be a merger between Telkom and MTN. And given that the share price increased from R168 to R176, the unusually heavy trading seems to have been underpinned by orders to buy rather than sell.
On September 3, Telkom and MTN issued a cautionary announcement confirming that they were involved in talks.
Gerhard van Deventer, head of the Financial Services Board's insider trading unit, said that the board "definitely had looked at the trading", adding that "as part of the routine check, we will look at Telkom share transactions that occurred before the formal announcement".
The public will find out if there is something more ominous than portfolio balancing only after November 27, when the insider trading directorate meets and issues a list of insider trading cases. Telkom may or may not be on that list.
Business Report
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