MTN shares at 14-year low as oil price collapses

MTN Group shares fell more than 12% on Monday morning in Johannesburg, to their lowest levels in nearly 14 years, as investors digested the news of a shock fall in oil prices overnight.

The shares fell to as low as R66.59 shortly after markets opened, a decline of 13% compared to Friday’s close, over concerns about the impact of collapsing oil prices on the Nigerian economy. Nigeria is MTN’s biggest subsidiary. The West African country’s economy is heavily dependent on oil.

Brent crude was last trading at US$33.66/barrel, down 26.6%, after Saudi Arabia announced it would ramp up production and slash prices after Russia pulled out of an Opec plan to curtail output. This has led to fears of an all-out price war, sending stock markets around the world — including the JSE — into a tailspin. The rand also fell sharply.

Energy and chemicals company Sasol bore the brunt of the sell-off on Monday, with its shares falling by 50% in Johannesburg.

However, the contagion has also spread to telecommunications and ICT shares on the local bourse, with MTN the biggest loser. MTN is due to report annual results for the year ended 31 December on Wednesday.

Vodacom and Cell C’s largest shareholder, Blue Label Telecoms, were both trading down almost 6% — broadly in line with the market — shortly after 9.30am. Telkom was trading almost 8% down.

EOH falls again

Technology services group EOH, whose share price has been battered in recent months, fell to another multi-year year of R2.50/share before regaining some composure. Shortly after 9.30am, it was down 4.1% at R2.82.

Naspers was down about 4%, while its most valuable investment, China’s Tencent, closed down 4.4% in Hong Kong. — (c) 2020 NewsCentral Media