Budget over, now for the elections

On Wednesday last week Minister of Finance Tito Mboweni delivered a very boring budget speech. Eskom was a hot topic and our growing debt to GDP ratio and under-recovery of income tax will have the rating agency Moody’s considering a further downgrade for SA. There is not much else to say and most of the news was thoroughly covered in the press on Thursday last week in any case.

The attention will now shift to the elections on the 8th of May. At a recent investor conference the guest speaker, Solly Moeng, was very vocal about the shortcomings of the three major political parties in South Africa. He considers the ANC to be hamstrung by crooks in high positions and says Ramaphosa is a nice guy but the ANC can do with him whatever they want. He thinks the DA under Maimane is too soft and lacks the backbone to stand up to the ANC; and the EFF is just way too racist and populist to do anything constructive.

Meanwhile some of our bigger resources companies are doing very well; with Anglogold up 21% year to date, Impala up 44% and Angloplats up 38%. The SA rand dipped below R14/$ after the budget speech but predicting where it will go over the shorter term is now even more impossible than before.  Although our South African shares earn 70% of their income from international sources – 60% of which comes from China – and only 15 companies dominate our index, there are some smaller SA-centric companies at such tempting valuations that more than a few fund managers are starting to buy them with a 5-year view.

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