The Market is Closely Eyeing South Africa’s Election Results

The JSE has had a tough time on Thursday, with the all-share index down more than 1% on the first trading day following the national and provincial elections.  However, this is unrelated to the South African vote: trade tensions between the US and China have wreaked havoc in markets across the world. The real market barometer for elections is the rand – and that has remained steady following largely peaceful elections. Much has been made of the “mandate threshold” for ANC support in the election; most professional investors believe that if the ANC secures a strong enough level of support, it will become easier for President Cyril Ramaphosa to institute economic reforms, according to an Intellidex survey. The survey found that investors believe the magic level is 58%, so if the ANC gets more than that, it may trigger a rally in the rand, bonds, and shares. After 80% of the polling stations had tallied the results, the African National Congress stood at 56.99% of the vote, while the Economic Freedom Fighters had 10.1% and the Democratic Alliance 21.83%. Analysts say if the ANC and EFF together breach 66% of the total national vote, they could have a mandate to change the Constitution, which may inject some uncertainty in the market. Investors are also carefully eyeing what is happening in Gauteng, given its importance to economic activity, employment and the tax base.


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