> ## Content Index > Fetch the complete content index at: https://www.themarketpit.com/llms.txt > Use this file to discover other available public pages before exploring further. # South African Assets at a Discount? - URL: https://www.themarketpit.com/south-african-assets-at-a-discount/ - Published: 2026-10-26T05:00:00.000Z - Updated: 2026-10-26T05:00:00.000Z - Author: The Market Pit Editor - Tags: News, Weekly, The Market Pit --- On the Board | | Close | Week | | ------------------- | ---------- | ------ | | JSE ALSI | 108,020.14 | −2.63% | | S&P 500 | 7,623.68 | −0.47% | | USD/ZAR | 16.5918 | +0.63% | | Gold ($/oz) | 3,995.80 | −4.07% | | Platinum ($/oz) | 1,554.33 | −4.83% | | Brent crude ($/bbl) | 116.72 | +6.24% | Closing prices as at Friday, 23 October. USD/ZAR is coloured from the rand's perspective: red means the rand weakened. --- Around the Pit - [**Clicks and Afrimat: Quality stocks, tough sectors**](https://www.moneyweb.co.za/moneyweb-podcasts/moneyweb-now/clicks-and-afrimat-quality-stocks-tough-sectors/?ref=themarketpit.com) *(Listen)* - This theme is relevant for later in this week’s instalment of “Into the Pit”. - **Why this matters:** Clicks and Afrimat could be an indication that good South African businesses are trading at a discount. - [**A shortage of sulphur could hurt mines and farms everywhere**](https://www.economist.com/finance-and-economics/2026/10/15/a-shortage-of-sulphur-could-hurt-mines-and-farms-everywhere?ref=themarketpit.com) *(Paywall)* - The Iran war in the Middle East is squeezing global sulphur supply. - **Why this matters:** South Africa’s economy depends heavily on mining and agriculture. Higher sulphur costs ripple through the mining and refining supply chain. Higher sulphur prices also mean higher fertiliser prices and ultimately higher food prices. - [**Apple is Wall Street’s favourite AI haven as spending fears hit**](https://www.moneyweb.co.za/news/companies-and-deals/apple-is-wall-streets-favourite-ai-haven-as-spending-fears-hit/?ref=themarketpit.com) - As more and more people become sceptical of the spending behind the AI buildout we have seen over the last couple of years, Apple seems to be a likely haven. - **Why this matters:** Apple decided to diverge from the mainstream AI strategy some months ago now, and that direction seems to be cushioning the AI woes. - [Musk Tries to Lock In His Tesla-SpaceX Dream Before Trump’s Exit](https://www.bloomberg.com/news/features/2026-10-22/tesla-spacex-merger-why-musk-wants-a-deal-before-trump-leaves-office?ref=themarketpit.com) *(Paywall)* - It may soon be simpler to invest in anything Elon-related. - **Why this matters:** The possible merger could directly affect Tesla and SpaceX if they’re part of your portfolio. --- Into the Pit ## The Exodus of JSE-listed Companies Just a few weeks ago, the news hit the market. Sanlam is offering the minority shareholders of Santam a buyout price of R505 a share in a bid to take the legacy insurer private, which is a 25% premium on the preceding 30 days’ Volume-Weighted Average Price (VWAP). Why is this relevant to you, you may ask? One reason a majority investor, or outside party, may want to buy out minority investors to take a business off exchange is that they believe the underlying asset is undervalued. Another reason could be the need for more control or less stakeholder interference when the company undertakes bigger strategic pivots during a crisis or corporate restructuring. However, the broader JSE trend seems to point to the former. Sanlam claims it is simplifying its corporate structure to justify the offer. However, we need to read between the lines. When the offer was made, Santam traded at a price-to-earnings (P/E) ratio of 10.46x. Compared to OUTsurance at a P/E of 22.7x, this suggests Santam might be at a discount. Digging deeper, we find that Santam disclosed a Return on Equity (ROE) of 28.42% (which reflects the Lloyd's syndicate start-up losses and heavy weather claims, and could slightly understate the figure). Return on equity shows how much profit a company makes for every R100 its shareholders have invested in it. So Santam's 28.42% ROE means about R28 of profit for every R100 shareholders invest. By contrast, OUTsurance, a comparable competitor, posted an ROE of 38.42% (bolstered by its offshore growth). The picture suggests that, to some degree, Sanlam, which intimately understands Santam as its largest shareholder since 1954, offered to buy a good business at a rather average price. Even at the offer price, the P/E sits at 13x, still shy of what it could be compared to that of OUTsurance. In fact, the veteran stockbroker, David Shapiro, is of the impression that Sanlam could have offered more, even suggesting R550, as reported by Daily Investor. Omnia is another example. Last month, a subsidiary of Solar Industries India offered to buy the chemical company at a premium north of 35% to its 30-day VWAP and 70.69% to its end-of-2025 closing price. Like Santam, the buyer is willing to pay a premium over the P/E multiple at the price before the cautionary announcement (a notice warning shareholders that something price-sensitive, such as takeover talks, is in the works) for the underlying asset. The offer puts the P/E valuation, calculated at the offer price, at roughly 16x, compared to the roughly 12x P/E we saw before the cautionary announcement. What makes Omnia interesting is that the buying party is an outsider (a foreign company with no prior stake). In Santam’s case, setting aside the numbers, Sanlam’s stated reason is simplifying its group structure - and groups **do** simplify their structures all the time. The question is just, “Why now?” Turning back to Omnia, as an international company, Solar Industries India could be exploiting market-related discounts to gain a cheap entry into the South African market. Are these just examples of individual companies being mispriced, or is there something wider afoot? As it stands, the JSE All-Share Index is trading at the lowest level this year, and we have discussed two examples of businesses receiving buyout offers from two buyers, each of a different type, in different industries, at roughly the same time. The broad nature of the buyout offers warrants a deeper look at the market. | | SA | EM | India | US | | ------------------------- | ------- | ------ | ------- | ------- | | P/E | 10.9 | 14.9 | 22 | 25.4 | | Equity-bond gap | 0.30% | N/A | (2.52%) | (1.05%) | | Year-to-date return (USD) | (4.17%) | 23.38% | 14.94% | 12.63% | Source: MSCI (P/E, returns), Investing.com (10-year government bond yields), October 2026\. Equity-bond gap = earnings yield (1 ÷ P/E) minus the country's 10-year government bond yield. Given the data above, and the caveats discussed below, we can observe that South African shares got steadily cheaper throughout 2026\. The JSE’s P/E fell from 15x in February to 10.4x (Based on JSE totals) in October, and is currently below its 3-year average of 13.9x. This is because earnings rose from R557.9b in February to R719.7b in October, while market cap fell from R8.4t to R7.5t. South Africa also posted a negative year-to-date return of -4.2% in USD, while the MSCI Emerging Markets returned +23.4% over the same period. South Africa appears cheaper than its peers in the data above, but even more strikingly, it seems cheap relative to its own bonds. South Africa is the only market in the dataset whose shares outyield the country’s own 10-year bonds (+0.3%). India (−2.5%) and the US (−1.0%) are both negative. From the start of the year, South African shares seem to have gone from expensive relative to bonds to break-even. Furthermore, India’s 22x P/E multiple may explain the Omnia buyout offer, as the P/E at the buyout price is 16x (as mentioned) and well below the Indian market multiple. There are also some glaring caveats worth mentioning, because nothing is ever black and white. On forward P/E, South Africa’s discount to EM (Emerging Markets) shrinks to roughly 11% from 27% on trailing, still a discount, but less stark. Brazil is just as cheap, but then again, Brazil shares many similarities with South Africa, so it is expected that they move in parallel. Lastly, cheap could mean cheap for good reason. As an investor, you need to assess the risks of the investment opportunities you are considering and whether they are fair. From all we have discussed above, I do believe there is a case to be made that the JSE might be trading below its fair value for now. I believe there is a lot of uncertainty about South Africa's future, and that might lead people, aka investors, to view the wider SA market with more scepticism about what might be fair. Especially when we are all chasing the "everything artificial intelligence" highs. South African assets are perceived as cheap enough to buy at more than a 25% premium. This is not financial advice, but I think it is worth asking what else might be cheap before someone else asks first. Good luck navigating the pit this week! --- **Disclaimer:** The Market Pit is for general information and educational purposes only. Nothing in this newsletter is financial advice as defined in the Financial Advisory and Intermediary Services (FAIS) Act, 37 of 2002, and it does not take into account your personal financial situation or needs. The author is not a licensed financial services provider. Opinions are my own and may change. While I aim for accuracy, I can’t guarantee that all information is complete or correct. Always do your own research and consult a licensed financial adviser before making investment decisions. I may hold positions in companies mentioned.