International Tech stock rout sees local Naspers drag down JSE
Naspers [JSE:NPN] collapsed R158.03 to R2,525 per share – slipping 5.89% following a sharp drop in Hong-Kong listed Tencent, in which Naspers has a large investment interest.
Tencent was targeted in a global rout of tech stocks seen on Friday last week. Goldman Sachs turned bearish on the tech sector, warning investors that they should not consider tech as a safe-haven, and some fear it has become a massive market bubble. The move saw the US market offloading the likes of Facebook, Apple, Amazon, Microsoft, and Google.
The rand traded at R12.80 to the greenback at the close of the JSE. The rand remained resilient and firmed 1% following Moody’s decision, late on Friday, to downgrade SA’s debt to a notch above sub-investment grade.
Gains in other sectors were not enough to halt the slide caused by Naspers, with the blue-chip Top40 dropping 1.54%, followed by the broader All Share Index dropping 1.25%. The financial index gained 0.42% on the back of the stronger rand, with banks increasing 0.94%.
The industrial index, which contains many of the dual-listed companies on the JSE, closed the session down 2.09%.
The price of brent crude firmed 1.24% to $48.74 per barrel. Last week the oil price slipped following the announcement that American crude oil inventories had soared by 3.3 million barrels.
The Gold price traded flat at $1266/Oz as market participants remain neutral ahead of the US Fed meeting on Wednesday. The Federal Monetary Policy Committee (FOMC) are set to announce their interest rate decision. The market widely expects that the FOMC will deliver their second rate hike for the year by 0.25%
The island nation of Puerto Rico voted to become the 51st U.S. state in a non-binding referendum. While 97% chose statehood, political foes may say the vote isn't credible as turnout was approximately 23% of the voting age population. It will be interesting to see if the Republican-controlled Congress will acknowledge the results, as Puerto Rico has a history of supporting the Democrats.
Sterling has fallen back below $1.27 on uncertainty over the nation's exit from the EU. Theresa May said the government is focused on "delivering a successful Brexit" as she reshuffled her cabinet, but kept the top five posts unchanged. Moody's has meanwhile suggested the U.K. election result is a credit negative for the country, suggesting that it will complicate and delay Brexit negotiations.
In France, Emmanuel Macron's centrist party won the first round of parliamentary elections on Sunday, positioning the new French president to wield an overwhelming majority at home and on the European stage. Such a landslide would give Macron a strong mandate to implement policies he says are needed to stir the sluggish national economy and overhaul the European Union.