JSE firm as for­eign in­vestors take flight

The Star Early Edition - - NEWS - Bloomberg

AT THE rate for­eign in­vestors are de­sert­ing South African stocks, the coun­try’s main in­dex should be in de­cline. It’s not, thanks largely to two shares that draw their strength from Hong Kong and Zurich.

The Jo­han­nes­burg Stock Ex­change’s bench­mark is up 0.6 per­cent this year, well short of the 16 per­cent ad­vance in the MSCI Emerg­ing Mar­kets In­dex, af­ter for­eign­ers dumped a net R77 bil­lion in lo­cal shares. That pic­ture would have been worse if it weren’t for Naspers, the largest weight­ing in the in­dex and big­gest share­holder in Ten­cent Hold­ings, and Zurich-traded lux­ury re­tailer Richemont, said Shaun le Roux, a money man­ager at PSG As­set Man­age­ment in Cape Town.

“The share prices of the two JSE heavy­weights that have con­trib­uted most of the year’s re­turns, Naspers and Richemont, are not de­ter­mined on the JSE,” said Le Roux, who helps over­see R33bn at PSG.

“Naspers tracks the share price of Ten­cent in Hong Kong, and Richemont’s pri­mary listing is in Switzer­land.”

Po­lit­i­cal tur­moil

Credit-rat­ing down­grades, a mori­bund econ­omy and po­lit­i­cal tur­moil swirling around the pres­i­dency of Ja­cob Zuma have weighed on South African stocks in 2017. The for­eign sales are larger than the R70bn off­loaded a year ear­lier, fig­ures from the stock ex­change show. The sell­off com­pares with in­flows of R26bn by this point in 2015, and pur­chases of R20bn in 2014. For­eign­ers were net buy­ers by this stage in each of the five years pre­ced­ing that.

“For­eign sen­ti­ment to­wards South Africa eq­ui­ties is poor and share­holder reg­is­ters in­di­cate wide­spread sell­ing by for­eign in­vestors of most JSElisted stocks over the past few months,” said Le Roux.

Naspers, which con­sti­tutes 17 per­cent of the 166-mem­ber in­dex, has gained 28 per­cent in 2017 as Ten­cent, of which it owns a third, surged al­most 50 per­cent in Hong Kong.

The stake in China’s largest in­ter­net com­pany has grown in value to about R1.5 tril­lion.

Richemont, the sec­ond-largest in­dex mem­ber at 8.5 per­cent, has climbed 18 per­cent. With its fo­cus on global lux­ury brands Richemont is less at risk from the SA econ­omy.

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