The latest election poll by research and consulting firm Intellidex shows the market is convinced President Cyril Ramaphosa will survive office until the 2022 African National Congress (ANC) elective conference.
Overall the market sees a 75.7% probability that he will serve a full five-year term as ANC president. However, the offset is a lack of reform in the absence of a proper mandate.
Intellidex Market Research polled asset managers (onshore and offshore buyside/asset managers) and financial market researchers (sell-side) as well as non-financial players consisting of policymakers, lawyers, diplomats, academics and journalists.
The research firm’s Peter Attard Montalto and Heidi Dietzsch, head of capital markets research and market research manager respectively, say one of the key questions in the poll related to the probability of “growth-boosting reforms” pushing growth higher by the end of the parliamentary term.
Reform was defined as that which would allow growth to reach 3% by 2024. The market believes there is only a 33.9% chance of this happening.
Does a mandate threshold exist?
Intellidex asked a number of questions related to a reform mandate for Ramaphosa arising from the election results but is “deeply sceptical” and does not believe that a “mandate threshold” exists beyond which it becomes easier for Ramaphosa to institute reforms.
The market however does seem to think it exists, but with some scepticism. It sees the threshold at around 57.5% of the vote. In terms of Wednesday’s general elections, all market segments “roughly agree” on a result of around 57-58% of the national votes for the ANC.
In the 2014 general and provincial election the ANC garnered 62.15% of the votes, the Democratic Alliance (DA) 22.23% and the Economic Freedom Fighters(EFF) 6.35%. Voter turnout was just over 73%.
Overall, the market expects the ANC’s result to just miss the level required for the mandate threshold, and to be below what is needed for a meaningful market rally.
There are some prospects of a rally if the vote is above 57.5% and Gauteng is kept as an ANC-run province. However, the start of the fightback – load shedding, the global environment and weak economic data – will keep the rally short, Intellidex researchers found.
In a previous note (April 18) Attard Montalto expressed his confidence in good polls, but warned that even the best public opinion poll is only a snapshot of public views at a particular moment in time.
At the end of last year 60% of the respondents in a poll by global market research firm Ipsos said they would vote for the ANC, 14% for the DA and 9% for the EFF. A recent poll by the Institute of Race Relations (IRR) shows the ANC at 55% of the vote, the DA at 22% and the EFF on 12%.
In the Intellidex poll, offshore asset managers seem the most pessimistic, expecting 57.1% vote for the ANC, while financial researchers and market forecasters (sell-side) are the most optimistic at 58.1%.
The overall market puts the national vote for the ANC at 57.4%, with 20.7% for the DA and 11.5% for the EFF.
Academics and policy makers (non-financial respondents) give the ANC 56.4%, the DA 21.4% and the EFF 14.1%.
All eyes on Gauteng and Western Cape
Looking at the two most highly contested provinces, Gauteng and the Western Cape, 52% of respondents don’t believe the ANC will keep outright control of the Gauteng provincial legislature. In the case of the Western Cape, 79% believe the DA will keep outright control of the provincial legislature.
In the IRR poll, the ANC is well below the 50% mark in Gauteng (closer to 40%), with the DA at 32% and the EFF at 18%.
Attard Montalto wrote in the April note that it seems quite possible, based on the IRR poll, that the ANC could lose Gauteng, which could have complex and important ramifications for the party.
Who will stay, and who will go?
The Intellidex poll also asked about the post-election period and the future of two heavyweights in the cabinet – finance minister Tito Mboweni and public enterprises minister Pravin Gordhan.
“Nearly all market participants expect Mboweni still to be finance minister at year-end with others barely getting a look-in.”
Names such as Reserve Bank governor Lesetja Kganyago and deputy finance minister Mondli Gungubele do not elicit a lot of confidence. However, the non-financial sector gives both these men a 22% chance of being in the hot seat by Christmas.
“Markets strongly expect Gordhan still to be public enterprises minister at year-end, though the view is slightly more split than the finance minister question,” says Attard Montalto.
He adds that six months ago it was almost baseline for both Intellidex and the market that both Mboweni and Gordhan would not continue, but circumstances have changed.