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Absa Slumps After Morgan Stanley Downgrade: Johannesburg Mover

Absa Group Ltd., the South African bank controlled by Barclays Plc, declined as much as 3.4 percent after Morgan Stanley downgraded the shares to sell from hold.

South Africa’s largest consumer bank fell 2.7 percent to 161.49 rand as of 2:25 p.m. in Johannesburg trading, heading for the biggest drop since June 26. The lender, with a market value of 116 billion rand ($13 billion), has declined 1.8 percent this year, making it the worst-performer on the six-member FTSE/JSE Africa Banks Index.

Barclays, the second-largest U.K. bank by assets, said on Dec. 6 it will increase its stake in Absa to 62.3 percent from 55.5 percent and combine its African operations with the Johannesburg-based lender to boost growth across the continent. Since Barclays announced it will buy 129.5 million Absa shares, the South African bank’s stock has gained as much as 12 percent.

“We now see the shares as fully valued, discounting both the special dividend impact and the price paid for the deal,” Greg Saffy, Johannesburg-based banks analyst for Morgan Stanley’s South African joint venture, wrote in a note to clients today. There is scope for a special dividend of about 7.50 a share, he said.

Absa will publish full-year earnings on Feb. 12 and details of dividends will be included, the lender said in a stock exchange statement today.

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