Cape Town - Naspers shares were down about four percent in early morning trade as fears over the Chinese rout spread into the JSE-listed company because of its exposure to Tencent.
The listed Internet, pay TV and media company owns about a third of Hong Kong listed Tencent, which has been affected by ructions in the Chinese market.
In the past few weeks, there has been a meltdown on the Shanghai stock exchange, which has lost $3.2 trillion over the past two weeks. This equates to a loss the same size as Brazil's economy.
At least 1 301 companies have halted trading on mainland Chinese exchanges, locking up $2.6 trillion of shares and new listings have also been halted.
Although the government is stepping in to stop the meltdown, investors are panicking.
The fallout has wiped 7% of Tencent’s market capitalisation and dropped Naspers stock down to R1 697.20 in early morning trade.
Vestact analyst Michael Treherne says the effect on Naspers’ shares is because of its holding in Tencent, which is a massive Internet company listed in Hong Kong. He says there is uncertainty in the market and investors do not know what to expect.
However, Treherne says the “emotional” reaction that has weighed on Naspers, which is the only company in SA with such a direct exposure to China, will be short lived.
Treherne notes Naspers’ share was over R2 000 “not too long ago”. He notes no-one will remember the fall in a year’s time.
Absa Investments analyst Chris Gilmour adds investors will just have to sit back and watch the situation play out, and there is no reason to believe there is anything wrong with Tencent’s fundamentals.
IOL