Performance of our Top 40 shares

When you look at the performance graph of our top 40 shares for the year to date, you will notice some of our biggest names right at the bottom. One of the companies that we all trust to perform above expectations, Naspers and its spinoff Prosus, are in the red for the year and another Naspers spinoff, Multichoice, is also lagging. The problem we have with Naspers and Prosus is that the Chinese government is clamping down on Chinese tech companies, and Tencent, in which Naspers and Prosus have a very large shareholding, is feeling the pain.

In the case of Multichoice, we have the familiar Nigerian revenue service clampdown. They claim that Multichoice is breaching some agreements and have instructed banks to freeze the Multichoice accounts. If this sounds familiar, it is. They did the same with MTN.

Speaking of MTN, this company is right at the top of the performance ladder this year. Together with Sasol, they fill the two top spots. We have to understand that both these companies were down massively over the last year or so and this is just a recovery of some of those losses. Two goldmines, Anglo Gold and Gold Fields,  are also having a red start to the year.

Going forward we might see Naspers and Prosus recover from these levels, who knows. The sad thing for strictly South African equity investors is that they have relied on Naspers as their only exposure to the roaring international technology sector and now they are losing all those gains. Tencent is still a fantastic company and if the politicians in China can just leave it alone, it will bounce back.

Selling Naspers now is perhaps not a good move, but as we have said before, overexposure to any one single stock or asset class is risky. Perhaps it will be wise to diversify out of some Naspers into some other international technology companies once the share has recovered.

 

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