Petrochemical giant Sasol soared in morning trade on Thursday on the back of the Brent Crude price narrowing in on $60 a barrel, a 12-month high. Sasol has had a rocketing start to 2021 and released a better than expected trading update last week, with earnings more than doubling when compared to the prior period. Investors are becoming increasingly optimistic that the company will be able to avoid a highly dilutive rights issue, with many investment houses raising their price targets for the company. The new management team have done an admirable job shaving down Sasol’s debt burden, which stood at approximately R180bn at its peak. The successful implementation of the group’s accelerated asset disposal program, which included selling a portion of the infamous Lake Charles Chemical Project, assisting in whittling the company’s debt burden by around half. Sasol’s share price operates as a proxy to the rand per barrel price of Brent Crude. Commodity prices are notoriously hard to predict, even the great Warren Buffet has admitted to this. As for the rand, we are all aware of the inherent volatility in our local currency. This makes predicting where Sasol will be tomorrow, near impossible. – Justin Rowe-Roberts
By Adelaide Changole
(Bloomberg) – South Africa’s main stocks index advanced for a second day, up 0.4% by 10:12 am in Johannesburg, with BHP leading miners higher, and as Sasol extended its rally to a third session as crude oil prices continued their climb, countering weakness in benchmark heavyweight Richemont and among banking shares.
The gains contrasted with trading in Asia, where there were signs that a global stocks rally is faltering after earnings rolled in, and as hawkish comments on a trade blacklist from President Joe Biden’s nominee for Commerce Secretary roiled Chinese shares. Investors are mulling scattered signs of a pickup in US activity as Biden pushes to win passage of a $1.9trn stimulus proposal. Federal Reserve Bank of St Louis President James Bullard said Wednesday stock prices reflect optimism about the US economic recovery.
“The seesaw of risk on the global playground is weighted in favour of emerging-market assets as the force of gravity is supported by constructive data, sustained stimulus and a steady vaccine rollout,” Nema Ramkhelawan-Bhana, a strategist at Rand Merchant Bank in Johannesburg, said in a client note.
Index giant Naspers rose for a fourth day, up 0.4% to provide biggest boost to the index.
Diversified miners joined platinum companies to drive a broad guage of mining stocks higher, with the sector index up 0.3%.
- BHP +0.7%, Exxaro Resources +0.7%, Glencore +0.2%, African Rainbow Minerals +0.8%
Platinum stocks rose 0.5%.
- Impala Platinum +1.4%, Sibanye Stillwater +0.2%, Northam Platinum +0.3%
Gold stocks retreated for a fourth day, the longest losing streak since November, as bullion prices extended their decline.
- NOTE: The Outlook for Gold Is Darkening
- Pan African Resources -2.3%, Harmony Gold -0.2%, DRDGold -0.5%
Read also: Gold’s golden run – but can it continue?
Sasol rallied 6.4% to the highest intraday level since February 26, as crude oil continued its ascent after OPEC+ said it will keep pushing to quickly clear the surplus left behind by the pandemic.
The Mobile Telecommunications index rose for a third day to the highest in more than a week.
- MTN +2.1%, Vodacom +1.2%
Richemont dropped for a second day, causing the biggest drag on the index.
An index of bank stocks slid for a second day, falling 0.7% as the rand weakened.
- FirstRand -0.7%, Standard Bank -0.4%, Absa Group -0.9%, Capitec Bank Holdings -0.4%, Nedbank -0.5%, Investec -0.6%
Read also: Global banking expert Kokkie Kooyman expects sector to bounce back in 2021
Foreigners remained remained net sellers of South African stocks for an 11th day Wednesday, disposing of R1.15bn worth of shares, according to exchange operator JSE. This is the longest stretch of outflows since October.
