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Directionless JSE in doldrums as Sasol empowerment deal goes sour

Sep 20 2017 13:46
David van Rooyen


Company Data

Sasol Limited [JSE:SOL]

Last traded 277
Change -6
% Change -2
Cumulative volume 58840
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

IMPALA PLATINUM HOLDINGS LIMITED [JSE:IMP]

Last traded 104
Change 1
% Change 1
Cumulative volume 181403
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

FIRSTRAND LIMITED [JSE:FSR]

Last traded 66
Change 2
% Change 3
Cumulative volume 9807472
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - News that another top South African company had to write off more than R10bn on an empowerment transaction gone sour sent shock waves through the JSE on Wednesday.

The major indices were initially all lower again for the second consecutive day, as local investors are still seeking for good news to push the market in a positive direction.

Sasol’s [JSE:SOL] share price was already more than 7% down by mid-morning. More than 1.8 million shares were sold after the announcement by the company that it will write off almost R12bn of debt used to bring in black investors, in a 2008 deal that foundered after a fall in oil prices hit its shares.

This followed after a similar announcement last week by Impala Platinum [JSE:IMP], which wrote off R10bn loaned to Royal Bafokeng for an empowerment transaction. The share has lost more than 15% over the past seven days in response to the announcement.

As a result, the All-share index was 0.25% lower at 55 870 points at mid-morning on Wednesday, which meant that the index has made no progress over the last seven days. The Top 40 index was 0.29% softer at 49 607 points.

The Industrial index was only 0.04% higher and the Financial index lost 0.4%, but the Resources index was more than 1.30% lower and the Gold index 0.35% down.

Sasol said it would buy back the outstanding R12bn of shares from its black investors, effectively cancelling them and allowing the company to write off the shortfall. For more than 250 000 Sasol Inzalo investors, the share price should have reached at least R462 by 2018 to break even. The stock, which traded 7.52% softer at R368.51 on Wednesday, looks unlikely to reach that level.

Sasol also shocked the market on Monday with news that it posted a 15% drop in full-year headline earnings, and that it has begun an asset review to strengthen its capital position. The asset review will look at what should be retained, grown or sold.

Impala Platinum [JSE:IMP] traded 0.48% softer at R33.06, and Anglo American Platinum [JSE:AMS] lost 1.90% to R336.50. The big commodity groups delivered a mixed bag. Anglo American [JSE:AGL] shed 0.73% to R230.13, but BHP [JSE:BIL] was 0.13% higher at R241.35.

News on the JSE was not however all doom and gloom. There was much excitement over the listing of Steinhoff Retail Africa [JSE:SRR], and the share price surged more than 8% on Wednesday on its debut, despite its parent company’s problem with former business partners in Europe.

The new company includes all Steinhoff’s retail interest in Africa, including the successful Pep Stores, and will soon also own a major stake in Shoprite. The group, which will be known as STAR, is valued at more than R75bn ($5.6bn). Shoprite [JSE:SHP] was 0.15% higher at R207.89.

Among the industrial shares, Naspers was again edging towards R3 000 a share, trading 0.36% higher at R2 985.36. Imperial [JSE:IPL] lifted 2.33% to R194.01.

The two biggest mobile operators were both higher. Vodacom [JSE:VOD] gained 1.67% to R161.14 and MTN [JSE:MTN] was 1.06% stronger at R123.82.

Rand Merchant Investment Holdings [JSE:RMI] was one of the top performers in the financial sector for the second day, gaining 1.56% to R42.25. The company said on Monday its headline earnings for the past year increased by 19%.

Barclays Africa [JSE:BGA] was 1.27% higher at R139.60, but Standard Bank [JSE:SBK] gained only 0.43% to R161.92 and FirstRand [JSE:FSR] 0.44% to R54.48.

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