The day after the much anticipated elections we woke up to a gloomy, rainy day. Voting day was marred by various problems relating to ID scanners and in a day and age where we can ask a computer almost anything, and technology is so advanced that cars can drive themselves, the IEC couldn’t get their electronic systems to work. But apart from some people having to wait for hours to cast their vote, things went relatively well. At the time of writing, it seems like the ANC will be the biggest loser and end up with mid 40% of the national vote and the MK party will be the biggest party in Natal. With no single party getting more than 50% of the vote, coalitions will have to be formed.
Looking at the reaction of the markets on the day after the elections, we saw the JSE falling 1.8% and the rand back at R18.80 to the dollar. The locally-focused sectors of banking and retail fell 4% and 5.7% respectively. It must be said that the retail sector was affected by the bad results from Woolies, and not only because of the election results. The MPC also kept interest rates on hold and that might have impacted the banking shares, but that is a stretch. It is worth noting that equities worldwide had a bad day and we just followed suit.
Resources shares have been struggling the whole election week but that could be attributed to the failed attempt by BHP to take over Anglo American. Over five days Anglo American was down 5.8% and Anglo Plats down 12.7%. Things have changed in the political landscape in South Africa and with the forming of coalitions to govern, it will probably be more complicated than in the past. The international investor community does not like complicated because it makes things more uncertain. It will be interesting to see if the net result over the next five years will be positive or negative.
In other news, Donald Trump was convicted on all 34 counts of falsifying business records. Poor American voters.
