The JSE’s All Share Index (Alsi) plunged below the psychological 70 000 points mark for most of the day on Tuesday. This came in the wake of the Naspers/Prosus fallout, after reports that majority-owned Tencent faces a stiff fine in China over allegations of violating anti-money laundering rules.
Africa’s biggest stock exchange fell around 3% in morning trade, however, it recovered some of the losses to close -1.77% (at 70 628 points).
Naspers and Prosus – the two biggest companies on the bourse had plunged by a further 10%, respectively, in morning trade. The two groups later pared some of the losses to close just over 4% down and 6.14% down on Tuesday, respectively.
This followed the JSE on Monday closing over 2.4% down, at 71 904 points, after Naspers plummeted over 13% and Prosus plunged over 11%.
All three tech stocks saw a major selloff, after the Wall Street Journal (WSJ) reported that Tencent is facing a record fine related to its WeChat Pay platform violating anti-money laundering regulations in China.
On Monday, the Naspers and Prosus selloff saw billions being wiped off the market caps of both groups, while Tencent’s share plunged over 10% in China.
According to Bloomberg, Naspers’s share price plunge on Monday is the most since 2000.
The group invested in the Chinese tech giant Tencent over two decades ago and “remains the biggest shareholder through Prosus NV” it noted.
The rout resulted in the JSE Alsi closing at its worst level this year on Monday, taking it below the record high close of 73 709 points at the end of 2021, and significantly lower compared with its 2022 record high of 77 536 points on March 2.
However, Tuesday’s fall saw the bourse reaching a new record low for the year. The bourse broke through the 70 000 points mark in November last year.
“South African markets closed in the red yesterday (Monday), dragged down by broad-based losses in technology sector stocks,” Anchor Capital noted in its daily morning commentary on the markets on Tuesday.
“Naspers plummeted 13.1%, after the People’s Bank of China charged Tencent with a record fine as its WeChat Pay had violated anti-money-laundering rules,” it added.
In its report citing unidentified “people familiar with the matter” – the WSJ said that China’s central bank “found regulatory breaches and lapses during recent inspection of the ubiquitous [WeChat Pay] payments network”.
Listen: Fifi Peters speaks to Makwe Masilela of Makwe Fund Managers about the JSE slump on Monday: