Uncertainty In The Markets Over Election Results

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Yesterday South Africa had it's general elections and this highlights how markets hate uncertainty. The reality is the ruling ANC party will not get a majority of 53% and a coalition government is the likely end result.

Political Shift

One could not have imagined this scenario back in 2004, but lookin at the figures the ANC ruling party is on a slide. How anyone can stay in power for 30 years when failing the population on all levels is beyond me, but this is the reality in Africa and it is mainly down to a lack of education, intimidation and loyalty to the cause they once fought.

2004 69.69%
2009 65.90%
2014 62.15%
2019 57.50%

Projected 2024 40-45%

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The ANC government has been in power for 30 years and has sent the country backwards mainly due to corruption. The next 4 years however depends entirely on who the ANC has a coalition with and this is making many nervous. If The ANC selects the EFF party as part of it's coalition then the country is finished. If they choose the DA then the country has a chance for the first time in 30 years to actually get somewhere.

For investors the ANC/DA coalition government would inspire confidence for once and maybe we will see the markets agree by turning green. The next few days will be interesting whatever happens and we may find ourselves back at the ballot boxes again in October if whatever coalition is formed and does not work.

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The problem with SA's politics is there is tribalism plus the vast majority of voters are uneducated. There has been 30 years since the apartheid government was replaced so there are no excuses for blaming apartheid for their failings and the blame lies firmly at the door of the ANC.

The next generation with many now educated or can read and write at least want jobs and a future ad are not just going to vote the ANC because they were the party that fought the struggles during the apartheid era. Those die hard supporters are slowly disappearing due to their age group and cannot be relied upon to give them the numbers required to hold on to power forever.

Over the next 20 years politics in SA will change and the hope is things do improve by getting rid of the once all dominant powerful ANC party. The scary part is the tribalism part that you cannot ever get rid of which is highlighted again in this election thus far with the Zulus voting for Jacob Zuma's party MK. The ANC is seen as predominantly Xhosa and history tells us the Xhosa and Zulus do not like each other.

The one plus of their hatred for each other is it dilutes the votes giving the hope to other parties maybe staling the election at some point. This maybe still a few elections away as this process will take time to erode the support.

The one downside to all of this is elections are basically over besides the counting that is taking place with an expected ANC victory load shedding is expected to start up again. This was placed on hold to help gain support and is so obvious of what is going to happen next week or the week after or even this weekend. All we know is the problem still persists and everyone is expecting the lights to turn off.

More business taxes are required to fund the National Health Insurance which was passed into law 2 weeks ago so there are many obstacles lying ahead for the average South African. This is not all doom and gloom depending on which parties are involved in the expected coalition and why this coming week is going to be crucial to SA's future.

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