JSE stock trading to resume after delay caused by record volumes

The start of equities trading on South Africa’s main stock exchange was delayed by hours Wednesday after the bourse was unable to fully process record transactions in the previous session as investors adjusted their holdings in local market giant Naspers.

Tuesday saw R145 billion ($9.7 billion) of equities traded, which caused “significant delays” in processing on some systems, bourse operator JSE said. Continuous trading will resume at 2:30 p.m. local time, the exchange said at 1 p.m., apologising “for the inconvenience caused.”

Read: Naspers, Prosus complete share swap, new cross-holding structure

Naspers dominated trading in Johannesburg Tuesday, falling 8.1% on surging volumes as partly owned Chinese online titan Tencent Holdings slumped and following the Aug. 16 completion of a restructuring and exchange transaction with unit Prosus NV. That deal changed the weighting of the two stocks in key South African equity indexes, pushing money managers who follow the gauges to adjust their portfolios.

“Because Naspers now has a smaller weighting in the JSE’s indices, and Prosus has a bigger weighting, index-tracking funds would have had to sell their Naspers holdings and buy Prosus shares to keep their portfolios in line with the new weightings,” said Lester Davids, a strategist at Unum Capital. “On the back of the re-weighting, the daily value of the shares traded rose to record highs, with Naspers alone trading above R70 billion.”

Naspers now accounts for 5.9% of the benchmark FTSE/JSE Africa All Share Index compared with 12% as of Tuesday, data compiled by Bloomberg show. Prosus has jumped to 7.5% from 0.9%.

Wednesday’s delay meant investors in Naspers, the biggest shareholder in Tencent, were unable to immediately trade in reaction to earnings from the Chinese company released after the market close in Hong Kong. Naspers has a 29% stake in Tencent, through Prosus. In Amsterdam trading, Prosus shares climbed as much as 5.1% and were 5.1% higher as of 1:20 p.m.

The JSE said the equity market will resume with off-book trades at 1:30 p.m., an opening auction at 2 p.m. and continuous trading 30 minutes after that. Its other markets were operating as normal, the company said.

Tuesday’s trading surpassed a previous record of R71 billion from December 2017, the exchange operator said. In 2017, the JSE paid out claims from clients and conducted reviews after technical issues prevented equities and derivative trading for an hour and 45 minutes.

© 2021 Bloomberg