South Africa’s stocks climbed further on Monday, as investors cheered the optimism about the outlook under a Joe Biden US presidency.
Democratic candidate, Biden, was elected the 46th president of the United States of America on the weekend, beating the incumbent Republican, Donald Trump in the Presidential elections. Biden secured 50.6% of the votes, with Trump getting 47.7%.
The FTSE/JSE Africa All Shares Index rose as much as 1.4% to the highest intraday level since 27 August, and was up more than a 1% in mid-morning trade, as risk-on sentiment helped boost 101 of the 141 listed companies, Bloomberg reported.
“The Joe Biden win saw risk assets gain momentum, with markets banking on more stability, while a divided congress will still ensure low interest rates for longer and potential fiscal stimulus,” said Bianca Botes, executive director at Peregrine Treasury Solutions.
Investec chief economist, Annabel Bishop, said in a note last week that the leader of the Democrats is expected to bring greater controls to flatten the Covid-19 curve and engender sustainable economic recovery – creating positive market sentiment.
“The Democratic party is expected to undo a number of polices implemented by Trump, including the most severe on immigration, returning to global agreements on the climate (and in particular re-joining the Paris Agreement) and improving US foreign policy,” Bishop said.
“A Biden presidency is expected to lay the foundations for a sustainable long-term future for the US, and global, economy, as well as bringing in as much fiscal stimulus as possible to ensure a sustainable economic recovery in the short and medium-term, without politicking.”
“A Biden presidency with a Republican Senate is likely the best possible scenario for emerging-market assets and if this outcome holds it should provide a very strong backdrop for the asset class,” Eric Stein, chief investment officer of fixed income at Eaton Vance in Boston told Bloomberg. “Biden should have a less confrontational approach to China and other countries than Trump.”
It reported that Biden’s biggest shift from Trump will likely be his approach to allies. While Trump has attacked traditional American partners like Japan, South Korea and Europe for free-riding on defense commitments and cheating at trade, Biden has promised to work with them closely to compel Chinese cooperation on priorities ranging from business ties to Hong Kong to 5G technology, Bloomberg said.
Not going quietly
Nedbank warned in a note that Trump’s legal team has filled lawsuits challenging the vote counts in some of the states, with Trump rejecting the outcome of the elections saying the ballots were “fraudulent, manufactured or cast by ineligible or deceased voters”.
Tellingly, Bloomberg reported that the administrator of the General Services Administration, a Trump appointee, has so far not formally acknowledged that Biden won the election, as required under the 57-year-old Presidential Transition Act.
Nedbank noted that in his first speech as president-elect, Biden called for unity and healing of the nation. The Democrats control the House, but no candidate managed to get the 50% required by the election law to control the Senate.
“Run-off elections will be conducted in January just before the new Senate convenes. Should the Republicans retain control of the Senate, there is likely to be confrontation between the two sides when it comes to certain economic policy issues,” it cautioned.
The changing of the guard at the White House, has also pushed the rand to its best level in eight months, with predictions that it could strengthen further.
Rand 15.57 this is fair value. Expensive is about 15.20. Could go there
— Wayne McCurrie (@WayneMcCurrie) November 9, 2020
South Africa’s president Cyril Ramaphosa took to social media to congratulate the president-elect and vice president-elect, Kamala Harris.
“We look forward to working with you and deepening our bonds of friendship and cooperation,” the president said.
We congratulate President-Elect @JoeBiden and Vice President @KamalaHarris and the American people on your election. We look forward to working with you and deepening our bonds of friendship and cooperation. pic.twitter.com/aajOxmL8KI
— Cyril Ramaphosa 🇿🇦 #StaySafe (@CyrilRamaphosa) November 7, 2020
The Nelson Mandela Foundation was less than complementary towards the outgoing Trump, calling his defeat a relief.
“It is with a sense of relief that we have seen President Donald Trump defeated in the US presidential election. Like many around the world, we celebrate the fact that we won’t have to watch him undermining democratic institutions and listen to him bringing the most powerful office in the world into disrepute for another four years.
“Now begins the daunting task for the US of undoing the Trump administration’s deepening of racism, sexism, xenophobia, Afrophobia and many other intersecting vectors of prejudice and hatred,” the foundation said in a media statement over the weekend.
The foundation congratulated Biden and Harris on their election campaign. “We look forward to seeing the White House occupied by a leadership team which understands the central importance of human dignity. We take special pleasure from the fact that Mz Harris is the first woman in US history to fill the position of vice-president.
“We wish Mr Biden and Ms Harris well in what will be a difficult transition. We call on Mr Trump to embrace the democratic process, support the transition, and begin contributing to the healing of a deeply fractured society. As Nelson Mandela often used to say, a good leader knows when to step down. And how to do so appropriately. It’s not too late for Trump to embrace dignity, for himself and for others.”