Taking Stock - Sasol group slashed its debt by a third.

In todays taking stock, we discuss that Sasol confirmed that it will not to pursue a rights issue, as the group slashed its debt by a third.

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MARKET COMMENTARY

 

SOUTH AFRICA

Local stocks were down slightly, with the Johannesburg Stock Exchange's Top-40 Index slipping 0.32% and the broader All-Share Index closing 0.15% down. Petrochemical firm Sasol's shares initially enjoyed a more than 4% rise after the company announced it had decided not to pursue a rights issue of up to $2 billion, but they had lost all their gains by market close to stand down 0.77%. Anglo American Platinum climbed 1.52% after the miner posted a price-driven jump in annual profit and set its sights on a 20% increase in output, while peer AngloGold Ashanti's shares also rose 0.91% after the firm boosted its dividend after a leap.

 

 

EUROPE

European stocks closed lower on Monday amid cautious trade in global markets. The pan-European Stoxx 600 finished the session down by over 0.4%, with tech stocks shedding 1.9% to lead losses, while the travel and leisure sector bucked the downward trend to surge 4.3%. On the data front, Germany’s Ifo Institute business climate index rose in February, with sentiment in Europe’s largest economy improving by more than expected on both current conditions and expectations. Developments surrounding the pandemic and vaccine rollout remain in focus. The UK on Monday unveiled how it plans to lift lockdown measures gradually in the coming months, as its vaccination rollout maintains its good pace.

 

 

US

Steep losses in technology shares dragged down the S&P 500 on Monday as a continuous rise in bond yields dented the appetite for growth stocks. Meanwhile, investors piled into economically sensitive names to bet on a comeback. Some equity investors grew concerned about rapidly rising Treasury yields in recent weeks as they could especially hurt high-growth companies reliant on easy borrowing while diminishing the relative appeal of stocks. These same tech stocks also thrived during the pandemic, so some investors may be taking profits and rotating into names that will do well in a recovery.

 

 

ASIA

Shares in Asia were mixed in early trade today, as investors monitored technology stocks regionally after their counterparts declined overnight on Wall Street. On the earnings front, HSBC is set to report its full-year results today. Reuters reported Monday, citing a source familiar with the matter, that HSBC is set to withdraw from U.S. retail banking. Ahead of that earnings release, shares of HSBC in Hong Kong were up more than 2%.

 

 

CURRENCIES

The rand weakened on Monday with demand for risk assets dampened by rising yields in the United States and some investor caution ahead of the South African government budget this week. At The close, the rand was eventually 0.2% firmer at R14.68 per dollar. The local currency was trading around R14.62.

 

 

COMMODITIES

Gold climbed a one-week peak this morning, bolstered by a weaker dollar and a retreat in US Treasury yields, while concerns of rising inflation further boosted bullion's appeal as a hedge against inflation. Oil prices rose again this morning after a jump in the previous session, holding near a more than 13-month high as US output was slow to return after a deep freeze in Texas shut in crude production last week. Shale oil producers in the southern United States could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output that shut down because of cold weather, as frozen pipes and power supply interruptions slow their recovery, sources said.

LOCAL COMPANIES

Sasol (SOL) -0.8%

Petrochemical multinational Sasol on Monday confirmed that it will not to pursue a rights issue, as the group made headway in slashing its debt burden by just more than a third (or R63.4 billion) for its half-year to the end of December. Sasol published its latest results on the JSE, which showed that the group’s total debt at the end of its interim period stood at R126.3 billion, compared to R189.7 billion as at June 30, 2020 (it full-year). This is a notable cut within just six months, which comes largely on the back of the 50% sale of its Lake Charles Chemicals (mega) Project (LCCP) in the US. The group said that it had “delivered a good set of results” for the six months ended December 31, 2020, with earnings increasing by more than 100% to R15.3 billion from R4.5 billion in the prior period. Sasol did not declare an interim dividend.

 

Liberty Two Degrees (L2D) +0.8%

Liberty Two Degrees, which owns malls in prime locations of Johannesburg and Cape Town, said on Monday its full year profit more than halved due to lower rental income and the temporary closure of shops and hotels due to Covid-19. In line with the government’s guidance, malls partially closed in South Africa in late March last year, with only essential services outlets allowed to trade during the initial hard lockdown period that lasted until May. The closure of some shops also prompted landlords and tenants to negotiate lower rental fees. Liberty Two Degrees (L2D) has stakes in high street malls such as Sandton City Mall and Melrose Arch. It said its headline earnings per share, the main profit measure in South Africa, fell to 25.04 cents in the year ended December 31, 2020, from 57.76 a year earlier. Its portfolio of properties, jointly owned with a unit of financial services group Liberty Holdings, provided R336 million ($22.78 million) of rental relief to its tenants for the year. L2D said its share of that was R112 million, adding that tenant arrears increased more than threefold last year to R96.4 million by December 31. As a result, net property income fell 45.6%, which was also hurt by lower parking revenue as less people went to malls. L2D approved a full year dividend of 32.33 cents per share, down 46%, after it said last year it would consider one.

INTERNATIONAL COMPANIES

HSBC (HSBC) 0.0 payment

HSBC on Tuesday said its reported profit before tax for 2020 fell 34% from a year ago to $8.8 billion, and declared an interim dividend of 15 cents per share. The bank’s profit beat analyst expectations of $8.3 billion for the whole of last year, according to estimates compiled by the London-headquartered bank. Ahead of the earnings release, HSBC shares in Hong Kong jumped 3% in early Tuesday trade. Like many of its peers globally, HSBC last year built up provisions for potential loan losses as a result of the coronavirus pandemic. Beyond the financial results, investors had been anticipating the bank’s comments on dividend payments and share buybacks. HSBC halted both those activities last year as British regulators urged lenders to conserve capital. The Bank of England in December said British banks can resume paying some dividends. And Barclays last week announced it would resume such pay-outs and embark on a 700 million pounds ($985.4 million) share buyback.

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Media, Sasfin Wealth

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