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🇿🇦 Local Market Indicators & News Highlights
🌟 Sasol’s Financial Struggles and Market Outlook
Sasol’s share price has significantly dropped from its peak in June 2022, currently trading at around R142. Despite this, analysts suggest it’s a buy, with a low PE ratio and a high dividend yield before its latest results. The half-year results for the period ending 31 December 2023 show a downturn, with a 34% decline in earnings and a reduced dividend of 200c, down from 700c. This decrease is due to the need for cash to sustain operations, resulting in an annualized dividend yield of less than 3%. Sasol’s financial performance has been impacted by lower chemical prices, operational challenges, and higher gas costs from Mozambique. The company’s correlation with crude oil prices has weakened over the past six months. Despite the current challenges, Sasol remains a focus for investors and analysts, with some viewing the low prices as a buying opportunity. However, the recovery is expected to be long and challenging, as reflected in the reduced interim dividend and the 34% decline in half-year profit.
🌟 Pepkor Sells The Building Company for R1.2 Billion
Pepkor Holdings has successfully sold its DIY and timber retail business, The Building Company (TBCo), to Capitalworks Private Equity and selected TBCo management for R1.2 billion. This deal follows a previous unsuccessful attempt to sell TBCo to Cashbuild, which was blocked by SA competition authorities. TBCo, a relatively small subsidiary within the Pepkor group, owns the BUCO chain of DIY and hardware stores and Timber City outlets. The sale is part of Pepkor's strategy to streamline its portfolio, enhance return on capital, and optimize shareholder returns. The proceeds from the sale will be used to reduce debt and fund strategic growth initiatives. Independent analyst Anthony Clark believes Pepkor has secured a good price for TBCo, especially considering the current weakened state of the building materials industry. He anticipates that it may take 12 to 18 months for the industry to recover, with 2025 potentially being a period of recovery.
🌟 Harmony Gold to Invest R7.9 Billion in World's Deepest Mine
Harmony Gold Mining Co announced a significant investment of R7.9 billion to extend the life of the world's deepest mine, Mponeng, from seven to 20 years. The project, set to begin in 2025, is a boost for South Africa's declining gold industry, where production has dropped to less than a fifth of its peak.Acquired from AngloGold Ashanti four years ago, Mponeng has become Harmony's star performer, tripling the miner's profit in the six months through December. Despite the challenges of mining deeper deposits, Mponeng continues to generate cash, contributing significantly to Harmony's output.Under the terms of the acquisition, Harmony will pay R108 million to AngloGold for Mponeng's production exceeding 250,000 ounces in 2023. Harmony's profit surged to R5.96 billion in the final six months of 2023, with overall production rising 14% to 832,000 ounces
🌍Global Market Indicators & News Highlights
🇺🇸 United States: Inflation News Lifts Spirit
Record Highs: The Nasdaq Composite joined the S&P 500 in reaching record territory, buoyed by strong tech performance and a positive start to the year.
Inflation Data: The release of the core personal consumption expenditures (PCE) price index, showing a 2.8% rise year-over-year, aligned with expectations and helped ease concerns sparked by the higher-than-expected consumer price index.
Fed's Stance: Despite the inflation news, Federal Reserve officials reiterated their cautious approach to rate cuts, with futures markets only slightly adjusting the odds of a rate reduction in the near term
🇪🇺 Europe: Mixed Signals Amid Inflation Concerns
Near Record Highs: The STOXX Europe 600 Index remained close to record levels, despite mixed performance across major indexes, as investors reassessed rate cut expectations due to sticky inflation data.
Eurozone Inflation: Both headline and core inflation rates declined less than anticipated, keeping pressure on the European Central Bank to maintain a cautious approach to monetary policy.
🇬🇧 UK: Housing Market Shows Resilience
FTSE 100 Sees Minor Losses: The UK's FTSE 100 Index experienced a slight decline, influenced by weakness in mining and energy sectors.
Housing Market Strength: Data from the Nationwide Building Society and the Bank of England indicated a pickup in the housing market, with an increase in house prices and mortgage approvals.
🇯🇵 Japan: Manufacturing Challenges Persist
Stocks Continue to Climb: Japanese equities maintained their upward trajectory, with the Nikkei 225 nearing a new record high and strong performance in February.
Economic Data: While manufacturing activity showed signs of deterioration, the services sector remained a key driver of the economy, highlighting a mixed economic landscape.
🇨🇳 China: Hopes for Monetary Easing
Market Gains: Chinese stocks rose on expectations of further monetary easing measures to support growth, with the Shanghai Composite and CSI 300 indices both seeing increases.
Mixed Economic Data: Manufacturing activity remained in contraction, while the nonmanufacturing PMI showed improvement. However, the property sector continued to struggle, with a significant drop in new home sales