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Johannesburg - Naspers [JSE:NPN], the local media group which represents more than 12% of the market value of the JSE, rose almost 5% on Wednesday morning, pulling the rest of the market higher.
At mid-morning Naspers was already 4.49% higher at R2 161.99 on expectations that Tencent, the internet giant in which it holds a 34% stake, will announce a huge profit jump later in the day.
News agencies reported that Tencent is expected to announce a 55% third-quarter profit gain on Wednesday morning. Tencent’s share price was at that stage already 2.85% higher on the Hong Kong stock exchange, after hitting a three-month low on Monday.
Analysts estimate Tencent’s net profit will be 11.51 billion yuan, from 7.45 billion yuan a year earlier. Revenue is likely to rise 47% to 39.06 billion yuan.
Before Wednesday’s trade Naspers dropped more than 6.21% over the previous seven days, as it was also hit by the sell-off in emerging market shares following Donald Trump’s election victory in the United States.
Emerging market sentiment improved on Wednesday morning, as the markets took a breather and Asian-Pacific shares rose 0.6%, bouncing back from a four-month low touched earlier this week.
The result was that the All-share index at mid-morning was already 1.47% higher at 50 155 points, while the Top 40 index traded 1.49% stronger at 43 377 points.
The star performer was the Industrial index, which gained 1.99% on the strength of the strong rise in the Naspers share price. The other big dual-listed shares on the JSE were also supported by stronger markets in Europe, where they are also listed, but their gains were much more moderate than those of Naspers.
It was not only emerging markets that had a breather on Wednesday, but emerging market currencies also recovered strongly against the firm dollar. The rand followed suit and traded 1% up at R14.27, which limited dual-listed share price gains.
At mid-morning the Resources index was 1.07% higher, but the Gold index had lost 0.32%. The gold price is still not far from its lowest level in five-and-a-half months reached on Monday, when the metal traded at $1 211 per fine ounce. Gold stood at $1 226.60 on Wednesday morning.
The recovery on the JSE could however be short-lived as there is still a huge demand for US bonds, as investors fear Donald Trump’s economic policies could lead to higher inflation, bigger budget deficits and higher interest rates. The drop in bond prices supported US stocks and the Dow Jones index on Wall Street closed on a new record last night.
Higher interest rates in the US are detrimental to emerging markets, as they could lead to an outflow from these markets back the US where risks are perceived to be smaller.
Among the other big dual-listed shares in the Industrial index, British American Tobacco [JSE:BTI] gained 0.59% despite news that Reynolds American, the second-largest cigarette seller in the US, is seeking a higher price from the company after it rejected a $47bn buyout offer as too low.
Steinhoff [JSE:SHF] traded 2.10% higher at R69.10 and Richemont [JSE:CFR] was also 0.26% stronger at R91.44.
Sasol [JSE:SOL] traded 1.68% up at R364.03 on the back of a higher oil price, which extended its gains of 6% the previous day. Oil prices surged on Tuesday as members of the Organisation of the Petroleum Exporting Countries were set to renew efforts on concrete steps to implement a deal on cutting output in the face of a persistent global glut.
BHP Billiton [JSE:BIL] was 1.22% stronger at R227.19. In the resources sector, Anglo American [JSE:AGL] gained 1.60% to R197.11.
The Financial index also continued its run of the past two days and at mid-morning was 1.20% higher.
Old Mutual [JSE:OML] was the busiest share on the JSE in terms of volume and traded 1.58% higher at R33.94. Barclays Africa [JSE:BGA] was 1.67% firmer at R149.96 and Standard Bank [JSE: SBK] was 1.39% stronger at R147.69.
* Disclaimer: Fin24 is a part of 24.com, a division of Media24, which is owned by Naspers.
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