South African equity investors got the election result they wanted, more or less. Now they’re hoping President Cyril Ramaphosa will follow by choosing a team of competent ministers that’s lean and free of the taint of scandal.
Ramaphosa is expected to announce his cabinet within the next few days and the early signs have encouraged investors: former environment minister Nomvula Mokonyane, accused of taking bribes, has already been ruled out. The position of deputy President David Mabuza, who has been linked to a series of scandals, is also in doubt while he faces scrutiny from the ruling party’s integrity commission. Mokonyane and Mabuza deny any wrongdoing.
A line-up that signals a push for clean government and a focus on the economy will boost the mood among traders, said Nolwandle Mthombeni, an analyst at Mergence Investment Managers in Cape Town.
“A good outcome in the cabinet appointments will bring about the sentiment needed,” Mthombeni said. “South African corporates in particular need some level of assurance before they can have the confidence to start investing in the country again.”
Ramaphosa has vowed to clean up the government after his predecessor Jacob Zuma’s scandal-marred nine-year rule. He needs a team of ministers to help him kick-start an economy that has expanded by an average of just 1.1% in the past five years.
South Africa’s benchmark stock index rose 0.5% as of 3:15 pm Friday, snapping five days of declines.
Here are more comments from investors about the cabinet:
Warwick Bam, head of research at Avior Capital Markets
Investors are looking for signals that will create investment confidence. The appointment of a credible and slimmed down cabinet will be the first of these. The market will be looking for a cabinet with experience, competence, integrity, and fresh ideas.
Ryan Woods, head of trading, Independent Securities
Appointing ministers seen as not tainted by scandal, or as Zuma apologists, will be key. Developments around Mabuza and Mokonyane will be seen as a positive. Mabuza has been mired in alleged dirty dealings for some time now.
Casparus Treurnicht, money manager at Gryphon Asset Management
The market is suffering from politician fatigue, and merely making appointments is not going to change investors’ minds. What investors would like to see is people going to jail for corruption and actions over words.
Mthombeni at Mergence
A good cabinet would include ministers in key portfolios such as mining & energy resources, finance and public service and administration being suitably qualified and not implicated in any unlawful acts and impropriety. The presence of individuals negatively implicated in the state capture inquiry or with a poor track record in previous cabinet roles would be a negative sign.