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Naspers drags JSE lower as Asian tech stocks fall

Johannesburg - Naspers [JSE:NPN], by far the biggest share on the JSE representing more than 12% of its market value, pulled the JSE sharply lower on Tuesday as local shares followed global markets lower against a backdrop of rising tensions on the Korean Peninsula.

Asian markets were spooked after North Korea’s foreign minister said on Monday that a weekend tweet by President Donald Trump counted as a declaration of war on North Korea and that Pyongyang reserved the right to take countermeasures, including shooting down US bombers even if they are not in its air space.

By mid-morning Naspers was already 3.43% lower at R2 860.40, after its Chinese subsidiary Tencent lost 1.17% to $337.60 on the Hong Kong Stock Exchange. Tencent, which traded on a high of $347.20 on Thursday last week, has lost almost 2.5% since then as tech shares are also under pressure on Wall Street.

As a result the Industrial index on the JSE was already almost 2% down at mid-morning  - no surprise in view of Naspers’ weight in the indices, and in particular the Industrial index. With the Industrial index losing 1.8% and the Financial index 1.42%, the All-share index traded 1.49% lower at 55 005 points.

The Top 40 index was 1.66% down at 48 741 points.

Gold shares gained 0.92% after the gold price rose more than 1% on political uncertainty, but resources shares were also 0.82% lower.

The surprise was that the rand did not gain much against the dollar, which is under pressure because of the tension in North Korea. By mid-morning the local currency traded at R13.31 to the dollar, very much in line with the levels of the past few days.

This is an indication that Tuesday’s sharp losses on the JSE are not only a result of turmoil on global markets, but also that confidence issues are keeping share prices and the rand under pressure.

Investors are concerned about the war of words between the government and the Public Investment Corporation's (PIC's) chief executive officer Daniel Matjila, after he said some government officials are out to get him because he won't allow pension fund money to be used to bail out debt-laden state-owned enterprises.

According to reports, the PIC has been asked by Treasury to buy its entire R12bn stake in Telkom to pay for a bailout of South African Airways, but Matjila has rejected the request, saying a purchase of the 39% shareholding would leave the company overexposed to the landline provider. He is willing to buy about R2bn worth of Telkom shares.

Telkom’s [JSE:TKG] share price fell back sharply on Tuesday morning and at mid-morning was already 3.44% lower at R57.21. The stock has lost more than 21% over the previous 90 days. MTN [JSE:MTN] traded 0.13% softer at R126.70 and Vodacom [JSE:VOD] shed 0.27% softer to R160.92.

Shares in the Steinhoff grouping were all lower. Steinhoff [JSE:SHF] lost 1.24% to R59.69 while Steinhoff Retail Africa [JSE:SRR] lost 0.78% to R25.58, with more than 44.4 million shares being traded for more than R95m. Shoprite [JSE:SHP], which will soon be part of the group, lost 0.75% to R204.74.

Remgro [JSE:REM] also dropped sharply and traded 2.36% down to R206.50 after the group announced a deal valued at R11.9bn. This will see the investment holding company exchange its minority stake in Unilever South Africa Holdings for cash and the outright ownership of the spreads business in the Unilever stable. 

The deal was announced on Friday just before the market closed, and Tuesday was the first opportunity for investors to react to the news. Richemont [JSE:CFR], also in the Rupert stable, was 0.78% softer at R118.56.

In the financial sector Sanlam [JSE:SLM] lost 2.30% to R67.52 and Standard Bank [JSE:SBK] slipped 1.63% to R160.00.

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Rand - Dollar
18.90
+0.2%
Rand - Pound
23.85
+0.2%
Rand - Euro
20.39
+0.2%
Rand - Aus dollar
12.31
+0.2%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
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