Business Maverick

Business Maverick

South Africa’s Sasol Is the Worst Emerging-Market Stock This Week

A general view shows the main Sasol Limited plant near Johannesburg, South Africa, 03 January 2017. Photo: EPA/KIM LUDBROOK

It has been a week of steep drops for some emerging-market stocks, but Johannesburg-traded Sasol Ltd. has out-plunged its peers, battered by the crash in oil prices and concern among investors of a potential looming rights offer as it grapples with a debt burden of about $8 billion.

Shares in the fuels and chemicals producer Sasol,  South Africa’s biggest company by sales, have lost 66% since the week started, the most among the 1,401 members of the MSCI Emerging Markets Index, which is down 6.2%. The latest slump has dragged the stock to levels last seen in early 2001.
Sasol fell more than peers in developing countries this week

Sasol delayed an investor call scheduled for Tuesday until March 17, noting that its oil-price exposure for the rest of the fiscal year is not hedged. While the company had assumed oil will stay in a range of $50 to $70 a barrel, Brent crude traded around $36 on Wednesday.

The stock fell 26% in Johannesburg, valuing the company at 32 billion rand ($2 billion). The yield on its $750 million of notes due in 2028 climbed for a sixth day to a record 6.97%.

Sasol’s 0.6% weighting in the benchmark Johannesburg index has limited its impact on the overall market. Among emerging markets, Poland’s WIG 20, Russia’s dollar-denominated RTS Index and Saudi Arabia’s Tadawul All Share Index have been the worst performers this week, falling at least 12%, while South Africa’s gauge has dropped about 5.7%.


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