South African stocks week ahead: Sasol and Stanbank in focus

08 Mar, 2004

South African energy group Sasol is due to post weak results this week, but Standard Bank profits should jump as the wider stock market consolidates following hefty gains in recent months.
"I think we are in a normal consolidation phase and after the results season we will see another run," said Abri du Plessis, Chief Investment Officer at Gryphon Asset Management.
"The global economy is still quite vibrant, your commodities prices are still very good, the only thing holding back the local market is no direction coming from the rand."
After a slew of economic indicators and an interest rate decision in recent weeks, no macroeconomic statistics are due to be released this week.
The focus will be on digesting the current results season as it draws to an end and whether the market can gear up for more upside after a strong rally recently.
The all-share index touched a 20-month intraday peak on Wednesday, after surging five percent during the previous five sessions and nearly 20 percent since early December. Since then it has dipped and levelled out.
The rand has been very volatile, weakening to 7.60 against the dollar in January, but then reversing and appreciating to 6.50 last month. It was hovering at 6.75/dlr on Friday afternoon.
Du Plessis, who expects the all share index to gain another 15 percent by the end of the year, sees the best value currently in the dominant commodities sector.
On Monday, synthetic fuels and chemicals group Sasol is expected to report a drop of nearly 40 percent in half-year profits, hurt by a strong rand and weak performance at its European chemicals business.
Sasol follows a succession of miners and other exporters who have seen profits hammered by a 28-percent appreciation of the rand last year.
Sasol warned last year that its interim and full-year results would be more than 30 percent lower due to the strong currency.
The other major results release will be on Wednesday, when Standard Bank is expected to post an 18 percent rise in annual headline earnings.

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