As the crucial 29 May elections draw near, financial markets are seemingly wagering on the ANC losing its majority and forming a coalition with right-of-centre minor parties. Dawie Roodt, an economist from the Efficient Group, shared with Biznews that the financial markets are already factoring in a favourable outcome, as evidenced by the robust performance of the JSE, bond markets and Rand. Roodt anticipates a potential surge of 20-30% for the JSE, a 200 bips gain for the bond market, and the Rand strengthening to R17 to the US dollar, should the election yield a ‘good outcome’. This scenario involves the ANC’s support falling to around 45% and the formation of a government with political parties ‘slightly to the right’ of the ANC, who would hold Cabinet positions or the role of Speaker.
However, Roodt cautions that the new government will face significant economic challenges, including local authorities that are in disarray and will likely request additional funds from the Minister of Finance, the state-owned enterprises that “have been run into the ground” and the national accounts, which have become unsustainable with debt levels ranging between 75% and 90% of GDP.
Video production by Gift Chiumia and Rex George
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