A new report by research group Intellidex lays out what the market’s expectations are for next week’s election, and how investors think the ANC, DA and EFF will fare.
According to Intellidex analyst, Peter Attard Montalto, market expectations are relatively low for the ANC in the May 8 vote, though investors believe that president Cyril Ramaphosa will be ‘safe’ as the country’s leader until 2022, at the very least.
Intellidex conducted a survey among investors, which drew in 46 full responses. The investors that were polled included both onshore and offshore, from investment banks, institutional stockbrokers, private banks and private wealth managers.
The poll was also opened to a wider audience, including policy makers, lawyers, diplomats, academics and journalists, the group said.
According to the survey results, the market sees the ANC securing between 57% to 58% of the national vote, with the DA expected to get around 19% to 22%.
The EFF meanwhile ranges between 9% and 12%.
Among the non-financial respondents, the ranges differ somewhat, with the ANC between 55% and 60%, the DA between 19% and 23% and the EFF between 10% and 15%.
The averages for the Intellidex survey are included in the graph below:
When it comes to Gauteng, which has been set up as the most hotly contested province in the coming elections, the market is split on whether the ANC will retain outright majority control, according to Intellidex.
Overall, the market as a 50/50 view on the outcome – though non-financial respondents believe the ANC will suffer an outright loss in the province.
ANC share of the vote
Many local analysts and economists have touted the 6o% support level as the share of the vote the ANC needs to secure president Cyril Ramaphosa’s reform mandate, which will lead to a rally in the market.
According to Colin Coleman, head of sub-Saharan Africa at Goldman Sachs Group, from a market point of view, an underperformance would lead to downward pressure on all asset classes in the country – equities, currency and debt.
“The reverse is also true – if (Ramaphosa) outperforms, there will likely be a rally in the market. Either side of the book-ends, you will see a sharp reaction in the market,” Coleman said.
If there’s a 55% outcome for the ANC, the analyst said the country can expect “more of the same” in terms of what the country has experienced over the last year or two.
However, according to Intellidex’s findings, there are very few in the market who agree with this view, with no real consensus for which level of support the ANC needs to get a positive market outcome.
The general range among investors who believe that a threshold exists for Ramaphosa’s ANC to secure a mandate ranged between 55% and 60% – and the threshold for a market rally also varied greatly, between 55% and 61%.
Intellidex said that the results show that there is scepticism among investors as to whether such a threshold even exists.