This Wednesday, South Africans will be casting their votes and investors are hoping that the ANC has a strong win so that stability can return to the market.
According to the City Press, who spoke to several economists, investors and market analyst explained why it is important for the ANC to gather a lot of support on May 8th.
If the ANC gains strong support of around 60% then:
- Ramaphoria will gain a second wave, which will result in a market rally and boost the rand.
- Policies are more likely to be implemented and when there is policy certainty growth is stimulated.
- The reform agenda of President Cyril Ramaphosa will be able to continue and he will be able to carry on tackling corruption.
- Foreign investors will be more willing to put money into the country
- Eskom will be in a better position to reform, which will then please rating agencies
However, on the flip side, if there is low support for the ANC then:
- It will show a rise in populism, which is anti-business. This will then lead to further uncertainty, a wobble in the market and the rand would weaken.
- Coalitions will need to form; which South African has proven to be bad at. This will result in further uncertainty.
- Ramaphosa will be in a more delicate position and further down the line he could be removed
- Eskom reformation will be uncertain and this can lead to downgrade by rating agencies.
However, the growth prospects of South Africa over the next few years will remain subdued and even the reform that is strongly supported will take time no matter the outcome of the election.
Article Source: https://businesstech.co.za/news/government/314974/why-investors-want-a-big-win-for-the-anc/