The most pivotal South African election in decades is already turning the tide of the country’s financial markets.
Money has been pouring into the country on a bet that the ANC will win enough of the vote to avoid being forced by left-leaning coalition partners to implement less market-friendly policies. South Africa n bonds absorbed the most cash in April since at least 2019, and the trend is continuing in May. Stocks are at a 15-month high. The rand is one of only five emerging-market currencies to strengthen this year.
“International equity investors are largely underweight South Africa, so their biggest risk is a positive election result driving a stronger currency and a re-rating of both our equity and bond markets,” said, a portfolio manager at Old Mutual Investment Group. “The low positioning and cheap assets could make this an explosive rally.”
To be sure, South Africa has a lot of convincing to do after years of economic mismanagement, according to“Those who have been disappointed have the memory of an elephant,” Msibi said. “They never forget or easily relinquish their reservations, demanding compelling evidence of change.” said. “If that happens, then we are confident South Africa will outperform emerging markets sharply, reversing the trajectory of the last 10 years.”Opinion polls have shown that the ANC risks losing its majority for the first time since 1994 in the 29 May election. But concerns that a poor showing may force it to seek alliances with parties to its left has waned., head of research at Standard Chartered Bank.
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