What’s Naspers and Prosus rally about?

The share prices of Naspers and Prosus remain linked to those of the Chinese tech giant Tencent. Naspers got the same boost as Tencent when the latter announced that it would launch a mobile version of a very popular video game – effectively linking portfolio performance to people enjoying video games.

Entertainment is big business, and it is hoped that the new mobile version of the Dungeon and

Fighter game will be as popular as the previous computer version, which was originally launched for personal computers in 2005. The new version of the game will be released internationally on 21 May.

Analysts following Tencent expect that the game will improve the profitability of Tencent’s gaming division and reassure investors that China has softened its stance after introducing restrictions on video game launches.

Recent rally

Within a few days since the announcement of the mobile version, the Tencent share price jumped 13% to HK$334.20 (about R800) this week.

It is astounding that merely announcing a mobile version of the game had a huge impact on Tencent’s market capitalisation. It increased by a massive R923 billion.

Tencent also gave the share prices of Naspers and Prosus – which have been advancing over the last week – a quick boost.

Naspers hit a 52-week high this week, while Prosus is just below its annual highs. Naspers and Prosus have actually rose faster than Tencent since the beginning of the year due to the rand’s depreciation. Naspers rose by 21% since 2 January, and Prosus by 19%.

Tencent advanced 16% on the Hong Kong Stock Exchange since the start of the year. In contrast, the JSE Overall Index has fallen nearly 3% this year, although it must be noted that it ended 2023 with a strong surge.

Meanwhile, Naspers is still trading at a large discount to its net asset value, according to the calculation that Naspers updates daily and publishes on its webpage.

The share closed on the JSE at R3 675.60 on Wednesday (up just over 2%), compared to the net asset value of a few cents short of R6 193.