Johannesburg – Naspers [JSE:NPN] pulled the major indices on the JSE sharply lower again on Thursday, despite announcing sparkling results. By mid-morning the All-share index was again below 60 000 points.
Naspers, the biggest share on the JSE representing more than 20% of market value, traded more than 3% lower in early trade which was the main reason for the Industrial index’s 1.16% loss by mid-morning.
The result was that the All-share index shed 0.80% to 59 934 points and the Top 40 index lost 0.92% to 53 462 points. The All-share index is now more than 2% lower than the all-time high of 61 212 points reached earlier this month.
These losses were mainly due to Naspers which traded 2.2% softer at R3 725.32 by mid-morning, after earlier falling as low as R3 670.00. This meant the share is now almost 10% lower than the recent all-time high of R4 090.00 reached on November 20.
Naspers announced strong 65% growth in net income, but investors were more concerned about a sell-off in high-flying technology stocks on the Asian markets on fears that a long boom in microchips may have peaked.
Shares of Amazon.com, Apple, Google parent Alphabet and Facebook all fell between 2% and 4%. The drop was sparked by a Morgan Stanley report earlier this week that the “super-cycle” in memory chip demand is likely to peak soon.
Tencent, the Chinese internet giant of which Naspers owns 34.4%, dropped 3.3% to HK$398.00 on the Hong Kong Stock Exchange and is now more than 7% lower than the recent peak of HK$430.
Tencent represents by far the biggest part of Naspers’s value and the group said on Wednesday that income from the internet – mostly from Tencent – now represents 77% of its income.
The rand is still strong and at mid-morning firmed to R13.65 to the dollar, compared to R14.15/$ at the beginning of the week. That put pressure on the prices of the dual-listed shares which earn a major portion of their income abroad, including Naspers which is now doing business in 120 countries.
Mediclinic [JSE:MEI] continued its rally and was 3.49% higher at R104.94. The share lost almost 15% on news that its proposed takeover of British group Spire had failed, but has now recovered almost half of those losses.
The strong rand also hurt the prices of resources shares, whose income is priced in dollar. Anglo American [JSE:AGL], the most volatile of the big conglomerates, lost 1.47% to R251.51. This mean that the share price is now almost 11% lower than the recent 52-week high of R243.89, but still almost 30% higher for the year to date.
Glencore [JSE:GLN], which lost almost 5% over the previous seven days, was 2.03% softer at R62.69 and BHP [JSE:BHP] dropped 0.81% to R248.24.
Financial shares hardly moved despite the strong rand, as investors are still worried about the implications of South Africa’s credit rating downgrade. The Financial index was only 0.13% higher at mid-morning. FirstRand [JSE:FSR] lost 0.42% to R56.70, but Standard Bank [JSE:SBK] was 0.46% stronger at R173.97.