Financial Times perspective: Beware investing in China (ie Naspers)

The share prices of Naspers and Prosus registered double digit percentage gains yesterday, lifting the spirits of heavily invested South Africans. But this is unlikely to spark a turnaround after the hammering of recent weeks. For one thing, yesterday's jump relied at least partly on support from the $10bn Naspers/Prosus share buyback programme. Their underlying asset, Hong Kong-listed Tencent, only rose half as much yesterday and it is down again in Hong Kong this morning. For another, investors everywhere are becoming increasingly concerned at vulnerability of the officially "illegal" VIE structure which facilitates all investments into Chinese companies – including the Naspers/Prosus stake in Tencent. All this is well-articulated in our republished story below from the Financial Times of London. It is also worth noting Beijing has started nationalising privately owned schools – of which there are 190 000 – on a directive their share be at least halved from their current market share of over 10%. The abrupt overhaul of China's education system is being done without compensation for the school owners – highlighting the risk of what South Africa's EWC legislation would introduce here. – Alec Hogg

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