MARKET WRAP: JSE closes lower as big guns drag market down, led by Naspers
The JSE closed weaker on Thursday as a number of present or former market heavyweights suffered significant setbacks on the day.
Naspers led the retreat among the big market caps, plunging more than 9% at one point, before closing 4.59% lower at R3,330. The group earlier announced in the day it intends selling 190-million of its shares in Chinese internet company Tencent, reducing its stake to 31.2%. Tencent is the main driver of Naspers’s meteoric rise over the past few years and the market questioned the unusual move, as it has never sold any of its Tencent interests before.
There were also questions where and how the proceeds would be used. Naspers indicated the proceeds, calculated to be about R125bn, would be spent to accelerate the growth of the group’s classified interests, as well as those in the online food and online delivery, and fintech businesses.
These interests are, at present, not contributing to earnings growth, which is predominantly driven by Tencent.
British American Tobacco shed 4.88% to R637.20. It remains a favourite of fund managers, with the fall on the day ascribed to the stronger rand.
Resilient, which once formed 40% of the property index, was another casualty on the day, losing 4.58% to R57.45 amid reports that its recently announced changes to align its corporate interests in Fortress B and its black economic empowerment vehicle may be cosmetic and a subtle form of "fronting". Resilient has lost 62% in 2018.
Other shares in the Resilient group were equally under pressure, with Fortress B ending the day 6.64% lower at R13.21 and Nepi Rockcastle 1.66% lower at R130.57.
Steinhoff retreated 12.96% to R3.09 amid indications the beleaguered group is not in a hurry to sell its stake in Steinhoff African Retail (Star) to address its huge debt overhang of more than R150bn.
The all share closed 1.83% lower at 57,224.60 points and the top 40 lost 2.13%. Banks dropped 2.54%, industrials 2.44%, general retailers 1.78%, financials 1.59%, and property 1.38%.The gold index rose 2.17%.
The rand trended weaker after the dollar gained on the euro. The local currency was at R11.8724 to the dollar from R11.8299 at the JSE’s close and the euro was at $1.2307 from $1.2340.
After breaking through 8% in intra-day trade, the R186 was bid at a yield of 8.01% from 8.08% after the JSE’s close as the market awaited Moody’s credit rating announcement on Friday. The US 10-year bond was at 2.8092% from 2.8824%.
The top-40 Alsi futures index lost 2.83% to 50‚700 points. The number of contracts traded was 32,776 from Tuesday’s 14‚529.