Watch out for resistance
With Naspers* currently testing its longterm resistance trendline dated back to March 2015, upside momentum could decelerate. On 14 August, Naspers gapped upwards after dipping on 11 August following a sharp retreat in the share price of Tencent, which came after Chinese authorities started an investigation into Tencent’s alleged cyber-security violations. Naspers owns 34.4% of Hong Kong-listed internet group Tencent, a stake valued at around $135bn, exceeding Naspers’s market valuation of $93bn at the time of writing on 15 August.
However, some investors have started expressing concern about the undervaluation of Naspers’s other businesses, including MultiChoice, Russia’s Mail.ru, and a number of its other e-commerce ventures, saying Naspers should unbundle its Tencent stake to unlock value for shareholders.
How to trade it:
Go short: Most analysts are overwhelmingly positive on Naspers, as they believe that Tencent’s bull trend is far from over. But if Naspers encounters major resistance at 294 000c/share, sellers may trickle in and prompt a correction. A near-term sell signal would be triggered below 273 100c/share, with potential downside to either 248 100c/ share or 246 500c/share. It should hold there. Failing which stay short as support at 227 000c/share could be tested.
Go long: Go long, or increase positions above 294 000c/share as Naspers would have breached its long-term resistance trendline – potentially commencing an even steeper uptrend towards the upside target situated at 343 610c/share.
Tencent’s booth at the 16th China Internet Conference held in Beijing in July.