JSE could open higher on Wednesday as Tencent leaps

The JSE looks poised for a strong opening on Wednesday thanks in part to a surge in the market value of Naspers-associate Tencent, which announced plans this week to buy back its own shares.

Tencent, the owner of WeChat that is 31% held by JSE-heavyweight Naspers, was up 2.4% at the lunch break in Hong Kong after saying it planned to allow directors to buy back up to 10% of its shares.

The Hang Seng index, in which Tencent’s weighting is about 10%, was up 0.9%. In Japan, the Nikkei 225 index was up 0.8%, while equity markets in Korea, Singapore and Australia also rose.

BHP Group, which is the JSE’s third-largest constituent behind Naspers, and British American Tobacco, was 1.9% higher in Australia.

That should help the JSE extend its gains, with the local bourse trading at its best level in nearly six months, in line with international markets.

The JSE closed flat on Tuesday after adding 1.2% to close at above 57,000 points on Monday. Sentiment has been boosted by a national ratings reprieve from Moody’s.

Meanwhile, data released in Australia on Wednesday shows that department stores, which have been struggling in the face of online competition, fared better in February. Woolworths’s Australian department store chain, David Jones, has been struggling since it took it over in 2014.

“In value terms, discretionary spending showed relative improvement [in Australia in February],” Barclays Research said in a note.

Food outlays were up 0.8% from January, “while clothing and department stores showed a pickup after declining for two consecutive months”.

Estimates of online retail sales indicated that online’s share of total retail sales had not grown from 5.6%, and online retail trade had declined in absolute terms since December, Barclays Research said.

No major financial results are expected on the JSE on Wednesday. On the data front, Standard Bank’s purchasing managers index (PMI) is due.

The rand, meanwhile, was firmer in early trade. It was 0.3% up against the dollar at R14.17/$ and 0.2% better against the pound at R18.63/£. Versus the euro, it was 0.1% better at R15.90/€.

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