The share prices of JSE heavyweights Naspers and Prosus plunged yesterday, by 17.4% and 15.19% respectively, on renewed fears of further impact on their investment in Chinese entertainment and internet services firm Tencent Holdings by the Chinese government.
Naspers’s share price closed at R1 711.35 and its Europe-based subsidiary Prosus’s share price ended at R741.48. In China, Tencent, one of the biggest multimedia companies in the world based on revenue, saw its share plummet 11.43% yesterday to HKD206.20 (R484). Naspers has about a 29% stake in Tencent.
CNBC reported online yesterday shares of Chinese tech giants Alibaba and Tencent closed down more than 11%; search company Baidu was 12% lower, while food delivery firm Meituan had tanked more than 14%.
This was after investors feared continuing strict policy and laws could hamper the growth of tech giants, after Chinese President Xi Jinping began his third term as leader, and packed that country’s Politburo standing committee with loyalists. This meant it was unlikely that measures already enacted to curb the growth of the tech groups would be reversed.
Techcentral also reported that Tencent recorded its first-ever revenue drop in the quarter ended June, and analysts had estimated that it was expected to report negligible sales growth and a 34% drop in net income, after online ad sales have been hit by China’s economic slowdown, while the gaming division is facing stiffer competition.
BUSINESS REPORT