Naspers [JSE:NPN] came under pressure following the release of its Hong Kong listed associate, Tencent Holdings’ 2nd quarter earnings results. The results were largely forecast to be weaker compared to previous periods, but they came in much worse than expected.
Second quarter net income for Tencent Holdings was down 2% to 17.9 billion yuan which missed analysts’ estimates of 19.3 billion Yuan. Subsequently, Naspers came off on the JSE and at one point it was down just over 10% to reach a session low of R3 000 per share.
Due to Naspers’ large weighting on the JSE, we have seen the JSE All-Share index weakening further following the release.
As at 14.35 CAT, Naspers was down 6.74% at R3 110.11 per share.
Tencent’s share price has been trading softer this week as Chinese regulators stepped in to stop the company from rolling out one of its new games.
The regulators have also indicated that they have stopped approval of new games, which could potentially have a negative impact on the company’s revenue for the next quarter.
Technically, Naspers is now trading below all the long-term moving averages which could be a significant indicator of further weakness to come.
* Fin24's parent company Media24 is part of the Naspers Group. Naspers owns a stake in Tencent.
- Musa Makoni is a trading specialist at GT247.com.