Finally Naspers unlocked some value

Naspers/Prosus has finally decided to unlock some value for shareholders. The management team has taken positive steps to reduce the discount of the value of the group’s underlying assets. Naspers was trading at a 60% discount to net asset value (NAV) before the announcement that they would have an open-ended sale of their Tencent shares and buy back some of their own shares. The news sent Naspers shares up by over 20% and Prosus also had a big pop. These positive moves will reflect in most of your unit trust funds because of their large holdings in these companies.

On the not so good side, Eskom was on level 6 loadshedding all last week and we will see the negative impact on company earnings a few months from now. Although our equity market has been a relative outperformer over the past six months, these structural problems will drag us back down and make investing in South Africa risky. We saw this almost immediately in the value of the rand where it fell to around R16,30 to the US$.

We are six months into 2022 and it has been a disaster for equity markets. The S&P 500 is down by close to 20% this year, putting it on pace for the worst first half in 50 years, but we should not think that this is the end of investing. In 1970, the S&P 500 fell 21% in the first six months and then gained 27% in the second, ending the year roughly flat. We will give you some feedback on the year to date results soon but for now we have to accept that times are tough, and that it might continue for a while. Investing sometimes requires patience – just look at what happened to Naspers. For years it had been losing you money and then, in one day, things turned around.

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