Naspers slides 5% again on Tencent

Shares in Naspers have declined some 10% over the past two sessions on the JSE, with the company closing 5% off on Monday, tracking losses in China’s Tencent Holdings.

The South African e-commerce firm lost R61 or 5% to R1,167, having stumbled to a loss of 4.51% on Friday (14 March), and an intraday loss of more than 8%, its biggest one-day fall in two-and-a-half years.

On Monday, Tencent, in which Naspers has a 34% holding, lost a further 3.10%, having declined 4.1% on Friday.

Reuters reported that China’s central bank is considering regulations that would significantly limit the use of third-party payment systems, including the payment arms of Alibaba and Tencent.

The People’s Bank of China released draft rules last week to major banks for consultation. The measures would ban the payment companies from handling offline transactions.

They would also heavily limit spending by individuals using third-party payment platforms and transfers from bank accounts to accounts managed by third-party companies, Reuters said.

Naspers’ return over the past 52 weeks is still a healthy 91.07%, having broken through the R1,000 barrier on the local bourse in December 2013.

Nadim Mohamed, investment analyst & partner at First Avenue Investment Management pointed out that Naspers is tracking the movement in Tencent’s stock price very closely as Tencent is the biggest contributor towards its underlying NAV.

“In my opinion, investors should not be too concerned as Tencent has had a very quick rise from KHD400 in Nov, 2013 to beyond KHD630 recently.”

“The price has reverted back to HKD545 as the move was overdone. In addition, there were concerns regarding a decision by the People’s Bank of China (PBoC) to suspend mobile payment and credit card services using quick response (QR) codes which has limited immediate financial impact,” Mohamed said.

“I do not think this will be a permanent ban as the Chinese Govt is generally supportive of innovation and, if the respective security concerns can be addressed, there is a high probability that the ban will be lifted,” the analyst said.

“I still believe Naspers and Tencent are very will positioned to benefit from the rise in emerging market internet adoption driven by smartphone adoption and mobile data.”

Paul Theron, CEO of financial management service Vestact also waved away any concerns about the immediate future of Naspers.

“I would not be too concerned. Companies like Tencent are tricky to value, as their profits are growing so fast. Investors should expect some volatility,” he said.

More on Naspers

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Naspers slides 5% again on Tencent