By Philippa Larkin 
Aug 12, 2021
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THE JSE HAS warned the market to take caution in trading Naspers and Prosus shares this week and on Monday amid the share swop transaction between the firms, which would introduce an element of market risk.
The JSE said in a note yesterday: “Clients are urged to take caution in trading Naspers and Prosus from Wednesday, August 11, to Friday, August 13, including Monday, August 16, as the holding on Wednesday morning through to Friday/Monday, may not be the position/holding you have on Monday, August 16, 2021, after corporate action has been updated. The positions are dependent on whether clients elect to participate and if the event will go ahead or not.”
In July, Prosus, the internet assets division of South African multinational Naspers, released a prospectus that details the share swop transaction with its parent company Naspers, whereby Prosus would acquire no more than 197.41 million Naspers N ordinary shares.
The group said the exchange offer was voluntary and was made on a pro rata basis in terms of which Naspers N shareholders were entitled to exchange their Naspers N ordinary shares for new Prosus N ordinary shares in accordance with the exchange ratio of 2.27443 new Prosus N ordinary shares for each
Naspers N ordinary share tendered.
“The board is pleased to advise the Naspers N shareholders that the exchange offer is open for acceptance from July 12, 2021, and will close on August 13, 2021,” Prosus said at the time.
The JSE yesterday also said it would further highlight that sourcing stock for short positions would be exceptionally difficult, ultimately, impacting settlements, capital adequacy and introduce risk into market as brokers and clients would not be able to source the stock via lending arrangements.
A short position is a technique used when an investor anticipates that the value of a stock will decrease in the short term, perhaps in the next few days or weeks. The intent is to borrow the stock for sale at a high price, then buy them back later at a lower price and return them to the stockbroker.
The JSE said the event would trade ex from yesterday and, as per the company circular, the company would only announce on Friday if the event would go ahead or not.
Prosus and Naspers shares have been very volatile lately.
Naspers makes up almost a fifth of the JSE with more than R1.16 trillion of market capitalisation even after spinning off most of its assets into Amsterdam-listed Prosus in 2019.
A week ago, both firm’s shares slid more than 5 percent in tandem with a 10 percent slide in Naspers’s biggest investment, the Hong Kong-listed internet group Tencent Holdings, which had slumped after a China official news agency publication decried the “spiritual opium” and “electronic drugs” of online games.
However, investors this week have turned optimistic on the sector and were finding a bottom in prices after the recent sell-off after the Chinese tech regulatory crackdown.
On Tuesday, the shares regained ground to boost the JSE, both rising more than 11 percent in intraday trade.
Prosus shares closed 1.01 percent lower at R1 350.32 and Naspers ended the day 3.83percent weaker at R2 846.50, on the JSE yesterday.
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