Tencent’s gaming woes likely to knock Naspers

Tencent was down 3.66% to HK$347.80 in Hong Kong on Tuesday morning, a bad omen for its 31%-owner Naspers and in turn the JSE’s top 40 index.

Tuesday morning’s drop appears to have been sparked by Chinese regulators ordering Tencent to remove a newly released game called Monster Hunter: World from its download service.

Whereas Monster Hunter: World is developed by a Japanese company called Capcom, Tencent’s best selling game, PlayerUnknown’s Battlegrounds, is developed by a South Korean company called Bluehole — whose titles Chinese regulators are apparently reluctant to approve.

Tencent is scheduled to release its second quarter financial results on Wednesday. Analysts expects its revenue to grow nearly 40% to about 78-billion yuan, but net profit to be flat.

Tencent’s profit is expected to suffer from Chinese regulators banning or delaying permission for new game releases.

“Industry analysts said the delay may stem from China’s unofficial economic sanctions against South Korea for its decision to install a US missile system,” Dow Jones said in a preview of Tencent’s results.

Chinese stocks were generally down on Tuesday morning after the country’s annual growth in industrial production for July was reported at 6%, missing the expected 6.3%.

Hong Kong’s Hang Seng index was down 0.89% and mainland China’s Shanghai composite index was down 0.5%.

Markets were relatively calm on Tuesday morning after a manic Monday during which the rand tracked the Turkish lira to swing between R15.42 and R14.18 to the dollar.

The rand was trading at R14.32 to the dollar, R16.34 to the euro and R18.29 to the pound at 6.20am.

It is a busy day on the JSE with results expected from private school operator Curro, UK-focused shopping centre owner Capital & Regional, former Steinhoff subsidiary KAP Industrial, and Eastern Platinum.

Curro said in a trading update on July 23 that it expected to report on Tuesday that its headline earnings per share (HEPS) for the six months to end-June would grow by up to 27%.

Curro’s tertiary education arm Stadio was unbundled in October 2017, and will be reported as a discontinued operation.

Real estate investment trust Capital & Regional — which focuses on “community shopping” as opposed to “destination” centres located in the UK — is scheduled to release its interim results for the six months to end-June on Tuesday.

It issued a trading update on July 17 that did not provide earnings or dividend forecasts.

Capital & Regional said the valuation of its portfolio was £883.4m at June 30, a 0.4% decline from December.

Its occupancy slipped slightly to 96.9% from 97.3% over the six months.

“By reducing our exposure to fashion and offering a more diversified range of products and services in conveniently located, welcoming and vibrant environments, we are positioning the business for long term success,” CEO Lawrence Hutchings said in the trading statement.

“We continue to believe that community shopping centres are ideally placed to provide the critical point where product meets people and play an increasingly integral role in the new retail landscape through click-and-collect and store-to-customer delivery.”

Statistics SA is scheduled to release June’s mining production and sales report at 11.30am.

After contracting 2.6% in May, mining production is expected to show a small annual growth of about 0.5%, according to a poll of economists done by Trading Economics.

Investec Bank economist Lara Hodes, however, forecasts it will contract by a further 3% rather than rebound.

“The domestic mining sector continues to underperform, with mining production down 2.7% for the first five months of the year,” Hodes said in her weekly note e-mailed on Monday.

“On a seasonally adjusted, three month rolling, annualised basis, mining production declined by 9.9% in May. As this measure is used to calculate GDP, it suggests that mining could again make a negative contribution to GDP, this time in the second quarter.

“A combination of factors have suppressed activity in this sector, including declining productivity, escalating costs and waning commodity prices, which have impelled mining companies to reduce production and look to slash jobs. This coupled with the still-not-finalised mining charter continue to deter investment into the sector.”