MARKET WRAP: Naspers and Prosus drag JSE lower
Big declines in Naspers and Prosus dragged the JSE lower on Wednesday while the rand hovered around five-month highs with analysts noting resilience in risk appetite despite the recent hawkish comments from the US Federal Reserve and the ongoing war in Ukraine.
Prosus, which holds the international internet assets of Naspers, slumped 8.86% after Tencent reported that revenue grew at the slowest pace since it listed in 2004. Prosus is Tencent’s biggest shareholder.
Naspers also fell sharply, closing 9.45% lower at R1,689.
China’s largest internet corporations have resigned themselves to a new era of cautious expansion more than a year after a bruising crackdown that has now engulfed every internet sphere, from e-commerce to online gaming and education.
Tencent’s main rival, Alibaba, also delivered its slowest top-line growth on record in the December quarter, Bloomberg reported.
The declines in Prosus and Naspers saw the JSE all share fall 1.21% to 74,838.09 points while the top 40 lost 1.32%.
The rand was firmer against the major currencies on the day, reaching an intraday high of R14.73/$ — the best level since October 26. At 7pm, it had strengthened 0.42% to R14.7585/$, 0.82% to R16.2344/€ and 0.98% to R19.4812/£. The euro was 0.24% weaker at $1.1.
“Global sentiment has improved over the near term despite the obvious issues that still exist; that is, war, inflation, and pandemic (in China this time),” said IG senior market analyst Shaun Murison. “The Federal Reserve has recently given a fairly positive assessment and optimistic outlook for the US economy (this has aided short-term sentiment).”
“The rand could also be buoyed further by the expectation of tighter monetary policy to follow at the SA Reserve Bank’s MPC meeting tomorrow [on Thursday]. Also, local attractive bond yields do seem to be encouraging some capital inflows,” Murison added.
The yield on benchmark R2030 government bond fell five basis points to 9.74% as the price of the securities improved.
Stats SA earlier reported that the annual inflation rate was unchanged at 5.7% in February, though the figure was compiled before the outbreak of war in Ukraine that has prompted a surge in the prices of commodities including crude oil, wheat, and fertiliser.
The Reserve Bank’s latest policy announcement is due on Thursday and Wednesday’s inflation number means a 25 basis-point increase in the repo rate is all but certain.
Gold gained 0.49% to $1,931.15/oz, while platinum lost 1.01% to $1,016. Brent crude was 5.99% firmer at $121.30 a barrel.
Source: businesslive.co.za