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Johannesburg - The big sell-off in technology shares globally also hampered the JSE on Friday, as investors are concerned that the sector’s recent strong rally has been overdone.
In the case of the JSE the market was pulled lower by Naspers [JSE:NPN], which lost more than 3% by mid-morning. Due to its weight in the sector, the Industrial index was again the biggest loser, trading almost 1% lower.
Naspers’s market capitalisation of R1.61trn represents more than 20% of the JSE's market value.
The sharp 0.96% drop in the Industrial index pulled the All-share index 0.60% lower to 59 47 points, while the Top 40 index was 0.67% softer at 52 914 points.
Naspers was trading 3.02% lower at R3 574.76 by mid-morning, which meant the share is now almost 12% lower than the all-time high of R4 090 reached as recently as November 20.
These losses are all due to Tencent, the Chinese internet giant of which Naspers owns 34.4%, which is heading for its biggest weekly loss in almost two years amid concern that the share’s recent rally was excessive.
The Chinese technology company lost 3.27% to HK$3756, taking its decline since November 21 to more than 10%. Tencent traded at an all time high of $430 on 21 November.
Tencent has added $274bn in value before the past week’s correction. As a result of the pull back in the share price Tencent’s weighting on the benchmark Hang Seng index on the Hong Kong Stock Exchange will fall to 10% from 11.7% when the quarterly review of the indices takes place later in the day.
Tencent’s drop is linked to a global sell-off in technology shares, as MSCI’s global gauge of technology shares has slumped 2.6% this week.
Despite the losses of the past week, Naspers is still 83.8% higher for the year to date, 28.6% stronger over the past 90 days and more than 11% up over the past 30 days.
The rest of the market is also hampered by the strong rand, which continued to trade at R13.67 to the dollar on Friday morning. The local received a boost from a weaker dollar and data showing the US recorded a trade surplus for the ninth consecutive month in October.
The South African Revenue Service (SARS) said on Thursday that the country’s trade surplus widened to R4.56bn in October, thanks to a weaker rand and subdued demand for imports.
Economists said South Africa’s export growth is due to a moderate recovery in the country’s major trading partners as well as higher commodity prices, whereas the sluggish local economy is still keeping a lid on import growth.
Among the big dual-listed industrial shares, which earn most of their income abroad and are under pressure if the rand is strong, British American Tobacco [JSE:BTI] traded 0.56% softer and Steinhoff [JSE:SHF] lost 2.91% to R55.03. Richemont [JSE:CFR] was however 1.34% stronger at R118.80 after losing more than 4% over the previous seven days.
Shoprite [JSE:SHP] was back on a new all-time high after it was confirmed that Steinhoff Retail Africa [JSE:SRR] has exercised call options to acquire a 23.1% stake and 50.6% voting control in Africa’s largest grocer.
The Financial index lost 0.37%, but resources stocks were resilient despite the stronger rand and the Resources index was 0.23% higher at mid-morning. Anglo American [JSE:AGL] gained 0.49% to R254.05.
- Fin24's parent company Media24 is part of the Naspers Group. Naspers owns a 34% stake in Tencent.
