Watch out for re­sis­tance

Finweek English Edition - - Marketplace - By Mox­ima Gama ed­i­to­rial@fin­ *fin­week is a pub­li­ca­tion of Me­dia24, a sub­sidiary of Naspers.

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, 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.

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