March 11, 2020
The Sasol (JSE code: SOL) share price has collapsed this week for three key reasons.
All in this is a total mess and coupled with poor management the market is not happy. I fully expect Sasol to survive, but in what form or price have no idea and I would NOT be buying.
COVID-19 continues to create havoc with Italy shutting down the entire country of 60million people as deaths exceed 600 and confirmed cases over 10k. But that still means some 20k cases they do not as yet know about. (Watch: COVID-9, markets in trouble)
Recession is fast becoming a certainty as regions (and entire countries) shut down, people stop going to work or out at all so no spending and no production. A huge concern is the USA who are not testing very well as South Korea did and may have tens of thousands of cases they don't know about.
South Africa has 13 confirmed cases and so far it is being handled very well. Identify the confirmed case and works backwards with who they contacted putting people into isolation. Testing is key as South Korea shows. But while we're very good at this sort of thing (remember listeriosis) it can very quickly overwhelm a struggling medical establishment. Global there are simple not enough ICU beds and we're likely far behind the global average.
Bottom line is that this is getting worse and will continue to do so for a while (no idea how long that while is). No surprise markets are panicking and extremely volatile and my view is they'll go still lower.
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