JSE will feel squeeze as China tightens tech rules

The JSE is likely to feel on Tuesday the squeeze of the months-long crackdown on technology companies by the Chinese authorities.

In a latest twist, China’s market regulator has released draft rules seeking to stop unfair competition in the internet sector. The news hurt sentiment, with tech giant Tencent falling nearly 4% in Hong Kong.

The ripple effect on the JSE will be felt through market heavyweight Naspers, which holds the 29% stake in the Chinese company via its global internet arm, Prosus.

The clampdown on the tech sector since the start of the year has erased billions of rand in shareholder paper money. Naspers shares are off 32% below their February peak of R3,834.86, according to the Bloomberg data.

Elsewhere, the rand was weaker in line with mildly risk-off sentiment, driven in part by concerns over the Delta variant. The rand was 0.47% weaker at R14.8985/$.

However, share markets are pulling back from the relatively high base after hitting record highs in recent days. The JSE-all share index hit a peak over the past week and started the week on a solid footing, though Naspers and luxury goods maker Richemont took the shine off the overall market because of their heavy weightings in the index.

The so-called SA Inc stocks, in particular banks and industrials, had a strong session on Monday, but they don’t necessarily move the needle in the overall market.

Commodity prices were narrowly mixed in early trade on Tuesday, with Brent crude stabilising at relatively low levels of $69.51 a barrel. The gold price edged up 0.20% to $1,790.

mahlangua@businesslive.co.za