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Naspers shines on jittery JSE

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The new JSE logo. (Supplied)
The new JSE logo. (Supplied)
Johannesburg - Naspers [JSE:NPN] was again the star performer on the JSE on Wednesday when it breached the level of R1 600 per share amid much uncertainty and volatility on the market.

The technology and media giant set a new high on Tuesday on news that its Chinese internet subsidiary Tencent has been awarded a banking licence in China. It received another boost overnight in New York when JPMorgan Chase & Co recommended buying Tencent shares, on prospects that growth in advertising revenue will boost profit at China's second-largest internet company.

Naspers owns a 34% stake in Tencent which represents the major part of its value and income. Tencent's American depositary receipts climbed 4.7% to a one-month high of $15.29, and Naspers gained 3.14% on the JSE to reach another high of R1 639.00. Shares to the value of R581m were traded on Wednesday morning in 2 605 deals and some analysts even think a price of R2 000 is a possibility in the near future.

JP Morgan said in a note that Tencent's ad revenue may double to make up a quarter of its total earnings by 2017. These new highs were set in an atmosphere of great uncertainty caused by the continuing fall in the oil price, which put stock markets and currencies under pressure worldwide.

All the major indices on the JSE were barely in the black by midday on Wednesday, after a sharp initial drop and some extreme volatility later on. By midday the All-share index was only 01.9% higher, while the Top 40 index gained only 0.20% to 42 831. The uncertainty is still the result of the oil price, which dropped even further overnight and has now lost 10% over the last two days. 

The price drop is not only due to fears of overproduction, but also some real concerns that slow demand is a sign of weaker-than-expected economic conditions. The oil price is now at its lowest since spring 2009. Even Wall Street, where the US economy is showing signs of a decent recovery, was under pressure on Tuesday which sent shock waves through markets worldwide.

Crude oil prices have plunged more than 55% since June, when benchmark Brent traded above $115 a barrel and US crude above $107. In Tuesday's session, Brent settled down $2.01 at $51.10 a barrel. It earlier fell to $50.52, its lowest since May 2009, and less than a dollar away from breaking below the $50 support.

In the first two days of this week Brent has dropped $5.32, or almost 10%. US crude finished down $2.11, or 4.2 %, at $47.93 after plumbing an April 2009 low of $47.55. Oil price concerns are also bad for sentiment towards emerging markets, as some of them are major oil producers. That includes Russia, whose rouble was again under severe pressure.

The best performing index on the JSE was the Industrial index, which gained 0.28% due the weight of Naspers in the index. The Financial index, which was a star performer in 2014 with a gain of 28%, was only 0.02% higher. Gold shares were again the star performers among resources stocks.

With the gold price still above $1 200 as investor turn to gold as a safe haven against uncertainty about oil and a possible Greek eurozone exit, the Gold index was another 2.7% higher.

Harmony [JSE:HAR], which increased by 11.4% on Tuesday, was another 5.94% higher at R27.09 by midday on Wednesday. Gold Fields [JSE:GFI] was only 0.84% stronger, but that was enough to reach another 52-week high of R60.91.

BHP Billiton [JSE:BIL] and Sasol [JSE:SOL], which have been under pressure lately, both recovered on Wednesday morning. BHP Billiton gained 1.12% to R239.04 and Sasol was 0.22% higher at R401.40.

* Fin24 is part of Media24, a subsidiary of Naspers.

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