Diversified miners
In order to assess the impact of a possible slowdown on the diversified miners we have derived four scenarios. We find that (1) under DBe that the sector is on 0.80x DCF and 5.82x 2012 - an attractive level; (2) assuming spot, the sector is on 0.74x DCF and 6.77x 2012 - also attractive; (3) assuming a soft patch (copper at US$3/lb, iron ore at US$100/t) we find that the sector is 0.94x DCF and 13.69x 2012 (we think this is what is now being priced in) - fair price today; and (4) assuming 1H09 average prices (ZARUSD 9.2, copper US$1.83/lb, iron ore US$74/t, platinum US$1095/oz and WTI US$52/bbl)the sector is on 1.16x DCF and 17.87x 2012 - leaving the sector looking expensive at current levels. Thus a soft patch is now priced in, but falling into another financial crisis remains a risk.

PGM miners
The PGM miners are trading on average at 0.9x NAV, implying 11% upside to NAV or 24% upside to the weighted average NAV multiple for the sector over the past 10 years of 1.12x. Using P/NAV, our key valuation metric, Amplats and Aquarius, trading at 0.86x and 0.85x NAV respectively, offer most upside from current levels. On a P/E basis, the sector is trading on an average 26.4x CY11E HEPS. Using spot currency and metals prices, the current ZAR/USD is weaker than our forecast for 2H11: under this scenario we see 7% upside to our HEPS forecasts for CY11E.

Oil and gas
Sasol's recent price performance mirrors WTI's correction to c.USD85/bbl, despite the appropriate Brent crude remaining firm at c.USD107/bbl. We expect the crude spread to remain open medium term, sighting Brent-specific support. Under a spot scenario, we envisage upgrades for FY12E EPS on a weaker-than-forecast currency. In a double dip scenario, we expect support from Sasol's differentiated progressive dividend policy, but highlight little confidence in OPEC's ability to support oil prices.

Eoin Treacy's view South Africa has not been immune to the recent selling pressure. The Johannesburg All Share retested its 2008 peak earlier this year and broke downwards from the 9-month range two weeks ago. It bounced somewhat last week but a sustained move back above 31,500 is required to indicate a return to medium-term demand dominance.

The FTSE/JSE Platinum Mining Index has been hampered at least in part by the strength of the Rand and platinum's underperformance relative to the other precious metals. The Index lost upward momentum from early 2010 and has been trending downwards since January. While oversold in the short-term, a sustained move back above 71 would be required to break the medium-term downtrend.

The FTSE/JSE Gold Index has been largely rangebound for the last two years. It is currently rallying towards the upper side but a sustained move above 2800 will be required to reassert the medium-term uptrend. .

Sasol broke out of a more than 18-month base in October and rallied impressively. It encountered resistance near ZAR40,000 in April and has since pulled back to a potential area of support near ZAR30,000. It is oversold in the short term, bounced impressively last week and there is room for a further rally. A return to medium-term demand dominance would be confirmed if the share finds support above last week's low on a pullback. (Also see Comment of the Day on February 21st).