Risks Surrounding South Africa's Election Cloud Outlook for Stocks

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South Africa,Election,Stocks

Risks around an election expected to be the most competitive since South Africa became a democracy in 1994 cloud the outlook for its stocks next year. Turbulence around the poll threatens to curb the benefit to Johannesburg stocks from falling interest rates and a soft landing in major economies. Surveys suggest the ruling African National Congress could lose its absolute majority for the first time since coming to power almost 30 years ago.

Risks around an election expected to be the most competitive since South Africa became a democracy in 1994 cloud the outlook for its stocks next year. While 40 national elections are due globally in 2024, the vote in South Africa is on Bank of America Corp. strategists’ shortlist of the most market-relevant in developing countries.

Turbulence around the poll — which is yet to be scheduled — threatens to curb the benefit to Johannesburg stocks from falling interest rates and a soft landing in major economies, investors say. Surveys suggest the ruling African National Congress could lose its absolute majority for the first time since coming to power almost 30 years ago, potentially forcing it to find coalition partners. It’s this scenario that’s spurring the greatest unease. “With unknown outcomes, there is a lot of uncertainty in the system,” said Duncan Artus, chief investment officer at Allan Gray, which oversees about $31 billion from Cape Town. “This is weighing on investor sentiment and particularly foreign participation in South African market

 

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