(Bloomberg) — The start of equities trading on South Africa’s main stock exchange was delayed Wednesday after the bourse was unable to fully process record transactions in the previous session as investors adjusted their holdings in local market giant Naspers Ltd.
Tuesday saw 145 billion rand ($9.7 billion) of equities traded, which caused “significant delays” in processing on some systems, bourse operator JSE Ltd. said. Trading was due to start at 9 a.m. local time, but the exchange said at 12 p.m. that the open is still delayed and that it would update clients an hour later.
Naspers Ltd. dominated trading in Johannesburg Tuesday, falling 8.1% on surging volumes following the completion on Aug. 16 of a restructuring and exchange transaction with unit Prosus NA. The deal changed the weighting of the two stocks in key South African equity indexes, pushing money managers who follow the gauges to adjust their portfolios.
“My understanding is that the JSE is struggling to process the volume of trades it experienced yesterday,” said Warwick Bam, head of research at Avior Capital Markets. “It certainly has everything to do with Naspers and Prosus and the index rebalancing.”
Naspers now accounts for 5.9% of the benchmark FTSE/JSE Africa All Share Index compared with 12% as of Tuesday, data compiled by Bloomberg show. Prosus has jumped to 7.5% from 0.9%.
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Wednesday’s delay means investors in Naspers, the biggest shareholder in Tencent Holdings Ltd., are unable to trade in reaction to earnings from the Chinese online titan released after the market close in Hong Kong. Naspers has a 29% stake in Tencent, through Prosus.
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JSE Ltd. said it is engaging market participants and will provide “ample notice” on the start of trading to ensure a smooth and orderly opening. Its other markets were operating as normal, the company said.
Tuesday’s trading surpassed a previous record of 71 billion rand from December 2017, the exchange operator said. In 2017, the JSE paid out claims from clients and conducted reviews after suffering a delay in trading.
JSE Paid Out Claims After Trading Disruption, Held Reviews
The Johannesburg bourse experienced “elevated activity” yesterday as rebalancing took place in the wake of the Naspers/Prosus share swap, Siobhan Redford, an analyst at Rand Merchant Bank in Johannesburg, said in a note to clients.
(Updates with further delay, in second paragraph.)
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