Naspers shakes off the Tencent woes, thanks to Trump
It’s also good news for the JSE
Naspers’s relief rally on Monday highlighted the fact that Africa’s largest public company, and by extension the JSE, is often at the mercy of US President Donald Trump.
Trump’s trade war with China is partly responsible for Naspers’s – and the JSE’s – declines so far in 2018.
Owing to the weak performance of its main asset, Chinese internet behemoth Tencent, Naspers has lost 15% of its value so far this year. Since Naspers accounts for about a fifth of the JSE, the stock has meaningfully dented SA’s largest bourse, which has delivered a year-to-date return of -12.3%.
If Trump and his Chinese counterpart, Xi Jinping, manage to sort out their differences and put an end to the trade spat, that would remove a major obstacle for Naspers and other important stocks on the JSE.
David Nathanson, a global equity specialist at Bellwood Capital, says Naspers and Tencent are both “priced for good returns” if Tencent manages to resume its high growth path.
“This outlook is not without risks though,” Nathanson says.
Fortunately, analysts are still overwhelmingly bullish about Tencent’s prospects, and this augurs well for the JSE.
In any case, Naspers is starting to show that there is more to it than Tencent.
In its interim results posted on Friday, the group reported vast improvements in the profitability of its e-commerce divisions.
Classifieds turned profitable for the first time, while payments, “e-tail” and travel all moved in the right direction. Deep investments in online food delivery should help that unit too.