US ban on China tech hits Naspers

JSE heavyweight Naspers had its worst day in a fortnight on Friday as the US clamped down on Chinese tech giants including Prosus subsidiary Tencent.

Naspers closed 4.18% lower at R3,088.39, its worst day since July 24, while Prosus fell the most in about 10 weeks, down 3.82% to R1,676.34. This is after US President Donald Trump issued an executive order to ban US companies from doing business with TikTok-owner Bytedance and Tencent, which owns WeChat and a big chunk of Epic Games. Naspers owns 31.2% of Tencent through Prosus. Tencent’s share price fell 5.04%.

Oanda market analyst Edward Moya said the ban “sent a clear message” that investors “would see heightened geopolitical tension leading up to the US election in November.

You can basically throw the phaseone trade deal in the garbage,” Moya said. Crushed by the pandemic, China was coming nowhere close to meeting its obligations with soybeans, pork, aircraft and liquefied natural gas purchases, he said.

Shortly after the JSE closed, the Dow was down 0.21% to 27,328.17 points. In Europe, the FTSE 100 and France’s CAC 40 were little changed. Germany’s DAX 30 added 0.60%.

The JSE all share fell 1.56% to 56,757.73 points and the top 40 1.72%. Industrials lost 1.81% and gold miners 4.57%. The all share is down 0.57% so far this year, according to Infront data.

Earlier, the Shanghai Composite lost 0.96%, Hong Kong’s Hang Seng 1.60% and Japan’s Nikkei 225 0.39%.

The yield on the R2030 government bond fell six basis points to 9.23%. Bond yields move inversely to their prices.

The SA Reserve Bank bought about

R2.5bn worth of government bonds in July, data showed on Friday. It has now bought about R38.4bn worth of bonds in the secondary market in an effort to ease liquidity pressures caused by the economic devastation of Covid-19.

Standard Bank currency dealer Warrick Butler said correlations have broken down with risk aversion in emerging markets, yet the dollar is weaker against everything else, especially gold. “One has to believe that further rand weakness is unjustified, unless we see another complete global meltdown.”

At 5.26pm, the rand had weakened 0.89% to R17.5721/$, 0.15% to R20.7161/€ and 0.23% to R22.9417/£. The euro fell 0.73% to $1.1791.

Gold was down 1.25% to $2,037.07/oz and platinum 3.44% to $964.64. Brent lost 1.29% to $44.52 a barrel.