JSE freefalls with world markets; Sasol wipe-out, future plans; Damning PIC report; SA’s flown from Wuhan

By Linda van Tilburg

  • The Johannesburg Stock Exchange lost almost 10% of its value yesterday, which is the worst crash since 1997. The All Share Index ended the day 9.7% lower. But it is not the only stock exchange that has been hit by coronavirus fears. In London, the FTSE fell by 10%, the biggest fall since 1987 because of rising concerns over the economic impact of the coronavirus. Trading was briefly halted on Wall Street because the market fell too far and too fast. Stocks in Europe were also down by around 8%. Sasol shares dropped another 30%, which means that Sasol stocks have now lost almost 95% of its value over the last 11 months. The share price fleetingly dipped below R30 a share before recovering to just over R37 a share by the end of the day. In April last year, Sasol stocks were worth R470. It is considered to be Sasol’s worst week since September 1989. Palladium plunged as much as 28% as panic selling driven by intensifying fears over the coronavirus seeped into precious metals, with gold slumping 4%.  Platinum plummeted more than 10% and silver shed nearly 7%. Miners on the JSE were also hit hard with Northam losing 23.36%, Sibanye-Stillwater 22.6%, Implats was down 21.80%, African Rainbow Minerals dropped by 20.32% and Harmony Gold was down by 16%. Gold Fields and South32 lost more than 15%.
  • Sasol has indicated that it would consider raising funds by selling additional shares and disposing of more assets amid growing concerns about its debt levels after the disastrous events of the past week which included a crash in the oil price. Reacting to the large disposal of Sasol shares, the company told Reuters it would consider potential equity issues, reduce cost, reschedule some capital expenditure, expand asset disposals in excess of the current $2bn target and engage lending groups. Sasol’s newly appointed chief executive officer Fleetwood Grobler said it was critical the company acted quickly and decisively. They were working towards a package of measures to ensure that the business is profitable even at low oil prices, he said.
  • The Mpati Commission into the governance of the Public Investment Corporation has concluded that there had been substantial impropriety at the PIC which manages R2.13trn of state-employee pension funds. Retired Judge Lex Mpati found that former Chief Executive Officer, Dan Matjila, flouted internal procedures and that his board had acted as a rubber stamp for Matjila who failed to disclose material information when making investment decisions. The commission also found that other senior managers used various means to “give effect to victimisation of staff.” The commission also recommended far-reaching changes to the PIC’s operating model, saying it was no longer fit-for purpose and needed to be restructured. President Cyril Ramaphosa who ordered the probe said he would hand it to the National Prosecution Authority for further investigation.
  • South African Airways may be an unlikely beneficiary of the coronavirus. While most international airlines have been blindsided by the impact of the coronavirus on global travel; the sharp reduction in international flights has deflated the price of leasing jets and made it easier for the business rescuers to renegotiate terms. One of them, Siviwe Dongwana said the oil-price crash will also lowering the cost of fuel. Dongwana said that an enforced reduction in flights to hubs such as London could help SAA preserve cash in the short term by taking out landing fees and fuel bills. He also said if some of the overheads at SAA can be trimmed ranging from over-staffing and generous employee benefits; some suspended flights could be reinstated. SAA operated with 100 employees to a plane, whereas other airlines managed with as few as 30 people. Dongwana anticipated a complicated and lengthy discussion with the unions regarding jobs.
  • The 122 South Africans stuck in the Wuhan province in China, where the coronavirus first broke out, will be flown home today by the South African National Defence Force. Some South Africans have indicated that they were staying on. Health Minister Zweli Mkhize said the ones that will be flown home, will be placed in quarantine in Polokwane, Limpopo. Mkhize indicated that all the South Africans due to land in Limpopo have tested negative for the coronavirus but will still be quarantined for two weeks. He also said that the 14 students who arrived earlier in the province have since been tested and they were all negative. So far 17 people have tested positive for the virus in South Africa.