South Africa’s main stocks index declined 1% by 9:53 a.m. in Johannesburg, the biggest intraday decline in 2021, after a slump in Tencent in Hong Kong pulled benchmark giant Naspers and its subsidiary, Prosus NV, lower.
Tencent lost as much as 6.7% in Hong Kong on Tuesday, as traders took profit after Monday’s 11% surge, which was Tencent’s biggest in almost a decade. Investors were also concerned by comments by an adviser to China’s central bank indicating that excessive liquidity and ultra-low borrowing costs were creating bubbles in the stock market.
Naspers fell 3.5% from a fresh record close, the biggest decline since December 28, and causing the strongest drag on the overall market. Prosus, which holds Naspers’ 31% stake in Tencent, declined 3.3%, the biggest drop in more than two weeks.
Globally, risk sentiment took a beating as investors mulled a possible delay in the planned US fiscal-relief package against a backdrop of concerns that some markets are overextended. South African stocks have spent their longest period in technically overbought territory since 2005, with the relative strength index on the benchmark index above the level of 70 that signals to some traders that gains may be excessive for 14 days in a row. The sequence was snapped Tuesday, as the RSI dropped to 67.
Sibanye Stillwater joined platinum and gold companies to pull miners lower for a third day, with the sector index dropping 0.3%.
Sibanye retreated 2.8% to its lowest since December 31. Peers in the gauge of platinum stocks dropped 1.1% to a two-week low. Northam Platinum -0.6%, Impala Platinum +0.3%, Anglo American Platinum -0.4%, Royal Bafokeng Platinum -2.2%.
Sub-index for gold companies dropped 0.4% as investors counted down to this week’s Federal Reserve policy meeting, and tracked the Biden administration’s efforts to deliver a $1.9 trillion Covid-19 relief proposal.
Gold Fields -2%, Harmony Gold -1%, DRDGold -2%, Pan African Resources Plc -1.6%.
Index heavyweight Richemont dropped 0.7%. Sasol retreated for a fifth consecutive session, the longest losing streak since October 16, as oil prices slipped with a resurgent Covid-19 outbreak in some regions and a slow roll-out of vaccinations weighing on the demand outlook, offsetting tightening global supply.
An index of general retailers halted a three-day rally, falling 0.4%
Mr Price -1.6%, Foschini -0.9%, Truworths -0.9%, Motus Holdings -1%, Massmart Holdings -1%.
Foreigners remained net sellers of South African stocks for a fourth consecutive day Monday, disposing of R219 million worth of shares, according to exchange operator JSE Ltd.