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Naspers surge lifts JSE

Johannesburg - The Industrial index on the JSE shot up by more than 1% in early trade on Wednesday, after Naspers [JSE:NPN] opened more than 3% higher.

Naspers, the major share in the Industrial index representing more than 12% of the market value of the JSE, was still at the same level by mid-morning, supporting all the major indices.

At that stage the All-share index was already 0.98% higher at 53 785 points, while the Top 40 index was 1.14% stronger at 47 465 points. The Industrial index was 1.31% stronger. Financial shares were also up, with the Financial index adding 0.74%%.

And as usual all the excitement had nothing to do with the South African economy or any of Naspers’ other businesses, but only with its stake in Tencent, the Chinese internet giant which makes up 16% of the market value of the Hang Seng index on the Hong Kong Stock Exchange.

Naspers owns 34.4% of Tencent, which represents by far the bulk of its income and market value.

Tencent, which gained almost 50% this year and added more than $100bn in value, at mid-morning was at a new all-time high of HK$298.00 after trading as high as $298.80.

Tencent is riding a wave of optimism about prospects for the Chinese economy, which on Wednesday pushed Asian share prices to their highest level in 18 months, and the Hang Seng index on the Hong Kong market to its best level in two years. The MSCI index of shares outside Japan is at the highest level since April 2015.

The stock also gained on news that Tencent will launch its mega-hit smartphone game Honour of Kings in the European Union and United States this year, amid a backlash in China over its addictive features.

As a result Naspers, which opened at R2 785.00, was still 3.15% higher at R2 779.80 at mid-morning. That means the share price is fast approaching its all-time high of R2 804.50, reached on May 26 this year.

The share has since then fallen victim to some profit-taking and lost about 10% of its value. As recently as July 6 it was as low as R2 474.71, before starting to rise again. Before Wednesday’s trade the share was more than 7% up over the past seven days and 26.1% over the past 90 days. The share is already more than 33.8% higher for the year to date.

Retail shares made a strong recovery on Wednesday, with Shoprite [JSE:SHP] trading 2.04% higher at R204.70. Shoprite’s share price lost more than 3% on Tuesday after the group said trading conditions in its local market, where the economy is in a technical recession, remained challenging in the second half of its financial year.

The company is pursuing a strategy of pushing upmarket, as spending by wealthier households is not much affected by the downturn.

Woolworths [JSE:WHL], which is also expected to announce disappointing results, was the busiest share on the JSE, trading 1.24% higher at R61.40. Woolworths lost more than 8% over the past month but has been resilient over the past few days and gained 1.08% over the seven days prior to Wednesday’s trade.

Mr Price [JSE:MRP], which announced the first drop in annual profit in 16 years at the beginning of the month, was 0.92% higher at R168.07. The share gained 6.42% over the seven days before Wednesday trade.

Banking shares continued their upward momentum of the last few days, supported by the stronger rand. Standard Bank [JSE:SBK], which gained 4.64% over the previous week, traded 1.10% higher at R154.98. FirstRand [JSE:FSR] added 1.42% to R50.71 and Barclays Africa [JSE:BGA] was 1.61% stronger at R144.20. Capitec [JSE:CPI] traded 1.14% higher on a new 52-week high of R844.46.

The rand was somewhat softer in early trade and dropped to R12.96 to the dollar, which put a damper on resources shares with the Resources index only 0.36% higher. However, by mid-morning the currency was again trading at R12.92/$ - the weakest level since September last year.

Lonmin [JSE:LON] was again the star performer in the resources sector, gaining 10.34% in morning trade to R16.00 and reaching 15% higher at R16.70 in early trade. The share price recovered strongly over the past week, gaining more than 30% over the previous seven days.

The group said earlier this week that it cut more costs and improved its mining performance in its third quarter. The share price is however still almost 50% lower over the past six months.

* Fin24's parent company Media24 is part of the Naspers Group.

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Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
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