Stephen Gunnion

Naspers declined the most in seven weeks after Chinese associate Tencent Holdings missed analysts’ profit estimates and said a slowing economy was affecting advertising.

Naspers fell as much as 3.7 percent, the most since September 26, to R534 and traded at R544.98 by 5pm in Johannesburg, down 1.73 percent.

Shares in Tencent, of which Naspers owns a 34 percent stake, slumped by 7 percent in Hong Kong, the most in more than a year.

Net income climbed to 3.22 billion yuan (R4.53bn) in the third quarter from 2.45bn yuan a year earlier, Tencent said on Wednesday. That fell short of the 3.33bn yuan average of eight analysts’ estimates. China’s decelerating economy “may slow revenue growth rates for the online advertising industry as a whole”, the games and social networks operator said.

Trading at 28 times estimated earnings, Tencent “is priced for high growth”, Simon Fillmore, an analyst at Independent Securities, said.

“When the growth isn’t quite what people expected, you’ll see the stock comes off sharply,” Fillmore said. “It’s a quarterly number so you can’t read too much into it. It’s a great business.”

Naspers earns 42 percent of sales from its pay television business and 20 percent from its investment in Tencent. Its stake in Tencent is valued at $20 billion (R176bn).

Naspers’ 30-day historical volatility, a measure of stock swings, increased to 21.28 from 18.64 on Wednesday.

A higher reading means an asset’s price can have bigger moves. – Bloomberg