Sasol piques interest on the JSE

Johannesburg - Share prices on the JSE went against the trend in world markets on Monday morning, as investors used the opportunity to pick up bargains in a very oversold market after last week’s sharp losses.

Technical analysts however expected the market to move even lower despite being oversold, as they thought a combination of negative sentiment, currency considerations and weakness in short-term technical indicators would conspire to create a further downdraught.

It did not happen and by midday the All-share index was 0.53% higher at 51 742 points, after losing 1.71% on Friday and more than 5% over the past seven trading days. The Top 40 index, which lost 1.78% on Friday, at midday was 0.60% stronger at 46 257 points.

The improvement was mainly the result of a recovery in the resources sector, with the Resources 10-index trading 2.21% higher by midday on Monday. The Industrial index gained 0.49% despite lower markets in Europe and the Financial index was only 0.11% higher.

It will be interesting to see what happens on the home front when the New York market opens, as analysts expect it to open lower again.

Uncertainty after the terrorist attacks in Paris over the weekend, which hurt the euro’s safe haven status, as well as indications of disappointing economic growth in the US, Japan and Europe have dented market sentiment worldwide.

Unlike the JSE, emerging markets bore the brunt of a clamour for safety as investors fretted over the fallout from Europe’s worst terror attack in more than a decade.

READ: Emerging stocks sink to six-week low

The MSCI emerging markets gauge decreased 1% in early morning trade, extending the steepest weekly slide since September, as Europe’s worst terror attack in a decade deepened concern that geopolitical tension will curb trade and slow global growth.

In the US the latest retail data was disappointing, Japan’s economy moved back in a recession and gross domestic product in the euro region rose only 0.3% in the three months to September, down from 0.4% in the previous period.

Imara SP Reid said in its daily Market Snapshot that a combination of risk aversion in the wake of the terrorist attacks, concerns about global energy prices, mounting evidence of slightly slower growth in a number of industrialised countries and persistent dollar strength continues to conspire against risk assets in the near term.

The weakness of the past few sessions has also been exacerbated by a general deterioration in the technical structure of a number of crucial global indices.

Interest in Sasol

Sasol [JSE:SOL] generated a great deal of attention on Monday, trading 3.74% higher at R404.60 by midday. The share price lost more than 13% over the previous seven days and more than 4.5% from Friday, due to a lower oil price. Although the oil price was still in the doldrums on Monday morning, the stock was at one stage more than 4% higher.

There is speculation that Sasol might be the next big South African company to attract attention from an international suitor, now that the merger between SABMiller [JSE:SAB] and Anheuser-Busch InBev has effectively been consummated.

In the past few months, Bank of America upgraded Sasol from “neutral” to “buy” while Citigroup upgraded the share to "hold". Sasol is trading at a price to earnings multiple of around 9 times earnings, which compares very favourably with the likes of Chevron (16), Exxon (16.5) and Total (13).

Much will depend on what happens to the oil price which has been a major driver for Sasol, and the recent collapse in prices has hurt the group.

Although the International Energy Agency has pointed out that the market remains oversupplied, some analysts think seasonal demand is likely to pick up in the US over the next few weeks which should support the price.

SABMiller was only 0.13% stronger at R876.17, but Naspers [JSE:NPN] gained 1.46% to R2 082. Richemont [JSE:CFR], which lost 7.5% over the past seven days on the back of disappointing results, shed another 0.81% to R110.50.

MTN's [JSE:MTN] share price did not respond much to the news that Nigerian regulators had waived a November 16 deadline to settle a R74.8bn fine for failing to disconnect unregistered customers and that negotiations between the two sides are continuing. By midday the share was 0.32% higher at R145.47.

READ: MTN making ‘headway’ on Nigeria fine - analyst

“Nigerian authorities have, without prejudice, agreed that the imposed fine will not be payable until the negotiations have been concluded,” the Johannesburg-based company said in a statement on Monday.

The two biggest commodity shares on the JSE, Anglo American [JSE:AGL] and BHP Billiton [JSE:BIL], which both lost about 13% over the previous seven trading days, were higher by midday. Anglo American gained 2.19% to R101.38 and BHP Billiton 1.63% to R196.25.

Glencore [JSE:GLN], which lost more than 19% last week, was another 1.99% lower at R20.70.

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