Johannesburg - The JSE was back at record levels on Monday and as is often the case, the record breaking run was again almost entirely due to Naspers [JSE:NPN] powering ahead on the back of a similar surge in the Tencent share price.
The Industrial index, which reached yet another all-time high on Monday, was again the driver pulling the All-share and Top 40 indices to new records. The index was already more than 1% higher than the previous session in early trade, despite the fact that most major industrial shares hardly moved except for Naspers, which gained more than 3% to just below R4 000 per share.
Naspers has a major influence on the Industrial index as its value is now 22% of the total market value. Its current market value of $115bn is six times more than any other share listed on the JSE.
Naspers was 3.08% higher at R3 965.33 at mid-morning, in response to Tencent's 4.12% gain in Hong Kong to a new record of HK$420.00.
The result was that the All-share index was 0.42% higher at mid-morning on a new all-time record of 60 381 points, while the Top 40 index gained 0.50% to a record of 54 181 points. The Industrial index was 1.15% higher on a new record of 93 190 points.
The rest of the market was subdued as financial shares lost ground on the eve of the rating agencies' decision later this week on South Africa’s sovereign credit rating. Analysts say financial institutions are preparing for a worst-case scenario which could hamper their access to finance, increase the cost of finance and will almost certainly lead to an outflow of foreign capital which will devastate the rand. The Financial index lost 0.40% in early trade.
Foreign investors are already net sellers of shares on the JSE, and it seems local investors are hoarding Naspers shares to protect them against a sharp drop in rand value.
The move in the Naspers share price is almost entirely due to the successes of Tencent, which published another strong earnings report last week. Naspers is more than 90% higher for the year to date after the share started the year on January 3 at only R2 016.32. Tencent gained more than 115% in Hong Kong dollar over the same period, as it started the year on January 3 at only HK$189.40.
In dollar terms, Naspers is almost 80% higher for the year to date while Tencent is almost 110% higher.
Naspers owns 34.4% of the Chinese internet giant and the value of its stake in Tencent at current prices is about $159bn, about $40bn more than Naspers’s total market value. This means Naspers is still trading at a significant discount to its underlying asset value, despite recent sharp gains.
Most of the big dual-listed shares in the industrial sector hardly moved, as there was very little support from the rand. British American Tobacco [JSE:BTI] traded only 0.23% higher at R924.14 and Richemont [JSE:CFR] gained 1.25% after losing almost 5% over the previous seven days. Sasol [JSE:SOL] lost 1.15% to R425.31.
Mediclinic International [JSE:MEI] dropped sharply again as the private hospital group said it does not intend to make another offer for British group Spire Healthcare. By mid-morning the share was 3.82% lower at R100.83.
The stock dropped more than 8% over the previous seven days after Spire, in which Mediclinic holds a stake of almost 30%, last month rejected a full takeover offer which valued the company at £1.2bn.
Among the banks Standard Bank [JSE:SBK] dropped 0.76% to R165.30 and FirstRand [JSE:FSR] was 0.64% lower at R54.38. Capitec [JSE:CPI] was however on a new 52-week high after it gained 0.84% to R982.84. Sanlam [JSE:SLM] traded 0.74% higher on a new 52-week high of R76.01.
Resources shares were also 0.49% softer despite the rand gaining ground to R14.05 to the dollar, as the greenback slipped on a report that investigators probing possible Russian interference in the US election had subpoenaed President Donald Trump’s election campaign for documents. BHP [JSE:BIL] shed 1.07% to R251.15.
- Fin24's parent company Media24 is part of the Naspers Group. Naspers owns a 34% stake in Tencent.