JSE asks public for comment on joint capping of Naspers and Prosus
A proposal to jointly cap Naspers and Prosus at 10% on its capped indices could alleviate risks for investors who are tracking them
The JSE said on Tuesday it was seeking public input on a proposal to jointly cap Naspers and Prosus at 10% on its capped indices, to alleviate the risks for investors who are tracking them.
The unbundling of Naspers and the listing of Prosus on September 11 led to an increased exposure to the overall Naspers stable from 10% to 12.02% in the FTSE/JSE capped shareholder weighted index (swix) all-share index.
This index is commonly used by institutional investors, and therefore poses concentration risks, should there be a steep share price fall in Tencent. The JSE imposes capping to reduce single-stock exposure.
The JSE is proposing that both would be treated as one entity for capping purposes only, and given their market capitalisations as at the end of October, Nasper's weighting on the swix would fall to 8.45% from 8.64%, and that of Prosus to 1.45% from 3.38%.
“The principle would be to construct a ground rule that will resolve any future large single stock exposures by looking at how much the valuation of the subsidiary company holding contributes to the parent company’s gross market capitalisation,” the JSE said.
Under the rule, when an index constituent had a controlling stake of more than 75% of another constituent, the two companies would be considered two classes of the same company for capping purposes.
At 11.15am, Naspers's share price was up 0.51% to R2,184.99, while Prosus was flat at R1,029.76.