THE markets are happy.
The man most economists and business people have been rooting for is the new president of the ANC. The rand strengthened throughout the day yesterday in anticipation of Cyril Ramaphosa’s victory and gained significantly after the announcement.
The currency opened at R13.07/$, having dipped below R13/$, when nominations results were announced. As the day progressed the currency outperformed major currencies and was best among emerging markets. It gained about 3% by 3pm to trade at R12.75/$ before the announcement and shortly after the announcement was seen 6.74% higher at R12.57, the strongest level since March this year. Bank stocks also hit record highs as traders bet on the trade unionist-turned politician and billionaire businessman.
But as happy as Ramaphosa is, he will probably not be hugely pleased with his top six. As John Cairns, RMB market analyst said, it’s a mixed bag of the old and the new, with more than a touch of Zuma acolytes in the mix. Lumkile Mondi, senior lecturer at Wits’ School of Economic & Business Sciences, said markets want certainty and stability. “Ramaphosa will be very good for SA’s economy. Next year certainly looks better than it did a few days ago,” Mondi said.
Raymond Parsons, economist and professor at NWU, said Ramaphosa has had a highly favourable impact on market perceptions and investment sentiment about SA. Bianca Botes at Peregrine Treasury Solutions said the new ANC president will revitalise positive sentiment towards the ANC and SA.
Business Leadership South Africa, urged the new leadership to focus on growing an inclusive economy that creates jobs. Business Unity South Africa said business stands ready to work in partnership with the leadership in the pursuit of creating a conducive environment for sustainable and inclusive economic growth.
George Herman at Citadel Investment Services, said the composition of the top six was a unique mix between the two opposing “slates” and added that this would hopefully ensure unity in the ruling party and guarantee a smooth transition. “Will Ramaphosa be able to lead effectively and implement his New Deal?” he asked.
On the JSE yesterday 159 stocks closed higher, 95 closed lower and 168 were unchanged. The All Share rose 0.51% to close at 5 7707.42. The government bonds firmed earlier on hopes of a Ramaphosa win. Laura Campbell, senior economist at Econometrix, said it was viewed that Ramaphosa would address issues of corruption and state capture seriously.
“Electing Ramaphosa as president of ANC is likely to result in improvement in business confidence. Businesses will be more willing to invest, leading to economic growth,” she said.