Business Maverick: South African Assets Signal Rising Anxiety as Election Nears

President Cyril Ramaphosa needs a strong mandate to push through fiscal and policy reforms in the face of opposition from factions within his party. But while a convincing majority may give assets a brief boost, the difficulty of the road ahead is making investors wary.

Volatility measures leave no doubt that rand traders see the election as an immediate, two-way risk. One-week implied volatility for the rand against the dollar has climbed above longer-term measures for the first time since March, and is now higher than any other emerging-market currency including the beleagueredBearish bets are also rising.

While the options market indicates anxiety over the election itself, bond yields suggest investors are also concerned about long-term prospects for the economy. South Africa’s yield curve has steepened to the widest this year as the rate on 10-year securities rose more than that on two-year bonds. While this is partly due to an increase in longer-dated issuance, it also reflects concern about the implementation of much-needed policy reforms to boost the economy.

Hard-currency bonds also signal worries over the fiscal outlook post-election, according to ING Groep NV. Yields on South Africa’s benchmark dollar securities are trending lower, but are about 50 basis points higher than those of junk-rated Brazil. While there could be a near-term rally for the debt after the vote, the medium-term outlook is clouded, said Trieu Pham, a London-based emerging-markets strategist at ING.

Canada Canada Latest News, Canada Canada Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

BUSINESS MAVERICK: South Africa is not the only regional economy with a debt problemSouth Africa was not the only economy in the region to suffer a lost decade or ‘nine wasted years’, to quote President Cyril Ramaphosa. In some ways mirroring Pretoria’s trajectory, many African economies have been racking up concerning levels of debt against a backdrop of relatively sluggish growth. Part of this stems from continued reliance on natural resources. The failure to diversify or industrialise is one reason why so much of the past decade has been lost.
Source: dailymaverick - 🏆 3. / 84 Read more »

Business Maverick: S. Africa Taken to Court After Doubling Coal-Emission LimitsSouth Africa’s government is facing a legal challenge over its decision last year to double the amount of sulfur dioxide that coal-fired power plants and refineries can emit.
Source: dailymaverick - 🏆 3. / 84 Read more »

Business Maverick: India’s Bharti Airtel Plans to Kick Off IPO of $5 Billion Africa Phone UnitBharti Airtel Ltd., India’s second-biggest wireless carrier, is preparing to kick off the initial public offering of its Africa unit in a deal that could raise about $1 billion.
Source: dailymaverick - 🏆 3. / 84 Read more »