malema ramaphosa
President Cyril Ramaphosa casts his vote in Soweto, while EFF leader Julius Malema votes in Seshego, Polokwane. Photos: Tebogo Letsie and Rosetta Msimango.
  • The market is closely eyeing South Africa's election results, and investors speculate that the rand could rally if the ANC breaches the "mandate threshold" of 58%.
  • International investors may also be heartened if the ANC with the EFF don't reach a joint 66% support in Parliament, one portfolio manager says.
  • This could make the controversial expropriation without compensation bill tougher to push through.
  • For more, go to Business Insider SA.


The JSE has had a tough time on Thursday, with the all-share index down more than 1% on the first trading day following the national and provincial elections.  

However, this is unrelated to the South African vote: trade tensions between the US and China have wreaked havoc in markets across the world.

The real market barometer for elections is the rand – and that has remained steady following largely peaceful elections, says Schalk Louw, portfolio manager and strategist at PSG Wealth Old Oak in Cape Town.

rand dollar
The rand/dollar rate over the past week. Source: XE

Much has been made of the “mandate threshold” for ANC support in the election; most professional investors believe that if the ANC secures a strong enough level of support, it will become easier for President Cyril Ramaphosa to institute economic reforms, according to an Intellidex survey.

The survey found that investors believe the magic level is 58%, so if the ANC gets more than that, it may trigger a rally in the rand, bonds, and shares.

With almost 42% of the polling stations counted, the ANC currently has 56% of the vote, while the EFF has 9% and the DA 24%.

For the latest election results, go to the News24 elections hub.

Importantly, the market will pay attention to the joint electoral support of the ANC and the EFF, says Louw.

If the ANC and EFF together breach 66% of the total national vote, they could have a mandate to change the Constitution, which may inject some uncertainty in the market, he believes. In 2017, EFF leader Julius Malema offered to vote with the ANC in amending the Constitution.

Following delays, Section 25 of the Constitution is expected to be amended by the new Parliament to explicitly allow land expropriation without compensation. International investors have been unnerved by this prospect.

Should the ANC and EFF fail to easily reach the 66% majority, this could hearten investors – even if the “mandate threshold” is not achieved.

The Gauteng factor

Investors are also carefully eyeing what is happening in Gauteng, given its importance to economic activity, employment and the tax base, says Sanisha Packirisamy, economist at Momentum Investments.

If the ANC wins Gauteng, the rand and bonds are likely to strengthen initially, she predicts.

“If the ANC loses Gauteng and forms a provincial coalition with the DA, the rand could find itself in a volatile environment as coalition governments are perceived to be slow to embark on the implementation of reforms, given the wide disparities in ideology.

"And if the ANC loses Gauteng and forms a provincial coalition with the EFF, there will likely be noisy headlines as uncertainty climbs. The rand would be volatile, with a bias to more rand weakness,”

With almost 70% of the Gauteng polling stations counted, the ANC support is at 50.2%, with the party barely hanging on to a majority.

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