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The JSE follows global stock markets sharply lower as investors worry tech stocks are overvalued

by , 14 April 2014

South African stocks ended the week lower, mirroring the trend across the world's major markets. Concerns about the value of technology stocks is causing some market jitters. The JSE was under pressure as Naspers resumed its slide lower due to its large stake in Tencent. Let's take a closer look at what happened on the JSE on Friday…

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Investors dumped technology stocks

Friday saw a “global sell-off of technology shares,” reports Fin24. This is down to worries that the companies “valuations are over-stretched”.

Naspers fell heavily once again after a short respite, says MoneyWeb. Naspers’ shares “tumbled 6.54% to R1,066.21”. The moves in Naspers’ shares are shadowing those of Tencent in China of which Naspers “owns over a third”.

In Hong Kong, earlier in the day, Tencent had fallen 6.7%, notes IOL.

The JSE Top 40 Index fell 1.13% to 43,116.91 points. The All Share Index shed 1.03% closing at 48,032.41. All the major indices fell.

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European stock markets fell sharply too

The JSE’s fall replicated those seen on the main European markets. The FTSE100 fell 1.21% to close at 6,561.7 points. The CAC40 lost 1.08%, closing at 4,365.86 points.

The 30 largest companies in the US, as shown by the Dow Jones, closed 0.89% lower on Friday evening.

The followed a tumble of 1.6% on Thursday, notes BDLive. Thursday also saw the tech heavy NASDAQ suffering “its biggest one day drop since 2011”.

But some analysts believe the fall “could be a healthy correction,” reports BDLive. Analysts are worried the JSE is overvalued as the All Share Index is “trading at a price to earnings ratio of more than 20”.

Locally, shares in Massmart fell 2.6% after the company announced its CEO resigned, says Fin24. This caused concern as the Walmart owned local retailer is “in the midst of a problematic expansion across Africa and growing competition at home”.

So let’s see what today brings. With the US markets down on Friday night, we’ll have to wait and see if the JSE follows suit.

The JSE follows global stock markets sharply lower as investors worry tech stocks are overvalued
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