After two days in which it dragged the broader market lower, record gains by the Naspers stable led the JSE to its first advance in four days — almost wiping out its 2022 drop — as pledges by Chinese officials to boost the economy and business confidence gave a lift to its most valuable asset.
The JSE all share index jumped as Naspers and Prosus, the Amsterdam-based technology investor through which it holds a 29% stake in Chinese technology giant Tencent, both rose by more than a fifth.
The gains came as the Chinese company rallied from its recent brutal sell-off, surging by 23%, after losses of about 10% on both Monday and Tuesday.
Asian markets were also cheered by a report that China is planning to ease its stringent Covid-19 containment policies, with the potential of lockdowns having been one of the factors that led to the oil price retreating to less than $100 a barrel on Tuesday. While that was relief for investors who had been worried about inflation spikes, it also raised concern that the recovery in the global economy would be derailed.
Naspers rose as much as 21.3% to R1,811.91, reducing that gain only slightly by the close. Prosus closed 21.1% stronger at R869.54. For 2022 so far, they are still down 27% and 33%, respectively, giving them a combined market capitalisation of about R2.6-trillion.
The all share index ended 4.04% stronger, cutting its decline for 2022 to just 0.3%. SA’s main index has been somewhat shielded from losses globally as commodity stocks benefited from higher prices.
The local currency has been similarly resilient. It gained 0.7% to R15.0072/$ just before 6pm on Wednesday and is up a little over 6.5% in 2022 so far.
The rand’s gains, which will limit increases in the cost of imported goods, may help ease concern that the Reserve Bank may react to record petrol prices, with the price on track to exceed R24/l.
Once worth R4-trillion, recent losses in Naspers and Prosus knocked them from their top position on the JSE. They were hit by China’s regulatory crackdown on technology stocks, which also ensnared the empire of Jack Ma, arguably its most famous entrepreneur. The halt of his Ant Group’s $37bn stock market listing in 2020 marked the start of the turmoil.
“The Naspers-Prosus situation remains highly fluid,” said Bruce Mommsen, head of equities at Matrix Fund Managers. “Last year was torrid in itself as Tencent was buffeted by a raft of Chinese regulations aimed at gaming and antitrust ... much of this remains unresolved.”
Prosus had its largest one-day drop on the JSE in more than two decades on Tuesday after Tencent was battered by a report that its mobile payment and digital wallet service, WeChat Pay, faced a record fine for allegedly violating money-laundering regulations in China.
While some analysts questioned whether it is worth remaining invested in Chinese stocks, others said the sell-offs were speculative and may reverse once calm returned.
“Tencent is a global champion, so the autocrats in Beijing won’t want to clip their wings too much,” said Michael Treherne, a portfolio manager at Vestact Asset Management.
The company’s relations with Beijing will normalise, and Tencent will continue growing, he said, “but the uncertainty risk has increased recently”. With Bloomberg
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