South African Stocks Post Biggest Drop This Month on Tencent Effect

South Africa’s main stocks index declined 1% by 9:53 a.m. in Johannesburg, the biggest intraday decline in 2021, after a slump in Tencent Holdings Ltd. in Hong Kong pulled benchmark giant Naspers Ltd. and its subsidiary, Prosus NV, lower.

Tencent lost as much as 6.7% in Hong Kong on Tuesday, as traders took profit after Monday’s 11% surge, which was Tencent’s biggest in almost a decade. Investors were also concerned by comments by an adviser to China’s central bank indicating that excessive liquidity and ultra-low borrowing costs were creating bubbles in the stock market.

Naspers fell 3.5% from a fresh record close, the biggest decline since Dec. 28, and causing the strongest drag on the overall market. Prosus, which holds Naspers’ 31% stake in Tencent, declined 3.3%, the biggest drop in more than two weeks.

Globally, risk sentiment took a beating as investors mulled a possible delay in the planned U.S. fiscal-relief package against a backdrop of concerns that some markets are overextended. South African stocks have spent their longest period in technically overbought territory since 2005, with the relative strength index on the benchmark index above the level of 70 that signals to some traders that gains may be excessive for 14 days in a row. The sequence was snapped Tuesday, as the RSI dropped to 67.

South African Stocks Post Biggest Drop This Month on Tencent Effect

Sibanye Stillwater Ltd. joined platinum and gold companies to pull miners lower for a third day, with the sector index dropping 0.3%.

  • Sibanye retreated 2.8% to its lowest since Dec. 31. Peers in the gauge of platinum stocks dropped 1.1% to a two-week low. Northam Platinum Ltd. -0.6%, Impala Platinum Holdings Ltd. +0.3%, Anglo American Platinum Ltd. -0.4%, Royal Bafokeng Platinum Ltd. -2.2%
  • Sub-index for gold companies dropped 0.4% as investors counted down to this week’s Federal Reserve policy meeting, and tracked the Biden administration’s efforts to deliver a $1.9 trillion Covid-19 relief proposal.
    • NOTE: Gold Treads Water as Investors Wait for Reassurance From the Fed
    • Gold Fields Ltd. -2%, Harmony Gold Mining Co. -1%, DRDGold Ltd. -2%, Pan African Resources Plc -1.6%

Index heavyweight Richemont dropped 0.7%. Sasol Ltd. retreated for a fifth consecutive session, the longest losing streak since Oct. 16, as oil prices slipped with a resurgent Covid-19 outbreak in some regions and a slow roll-out of vaccinations weighing on the demand outlook, offsetting tightening global supply.

An index of general retailers halted a three-day rally, falling 0.4%

  • Mr Price Group Ltd. -1.6%, Foschini Group Ltd. -0.9%, Truworths International Ltd. -0.9%, Motus Holdings Ltd. -1%, Massmart Holdings Ltd. -1%

Foreigners remained net sellers of South African stocks for a fourth consecutive day Monday, disposing of 219 million rand worth of shares, according to exchange operator JSE Ltd.

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