Rand firms as election vote counting continues

The rand strengthened against major global currencies on Thursday afternoon, as the counting of ballots in SA’s general election continued.

By 1.30pm, the governing ANC had secured 56.21% of the national vote, followed by the DA with 24.17%.

The ANC also led in Gauteng with 50.48%, but is at risk of losing its majority in the province, which would force it into seeking a coalition. The prospect of a Gauteng coalition is being closely watched by the market.

Citi Group economist Gina Schoeman had said in a note after meetings in London: “If an ANC-EFF coalition results in Gauteng, investors could become substantially more bearish given the EFF’s desire for broad-based nationalisation.”

The DA leads the Western Cape, with 54.88% of the vote, followed by the ANC at 29.36%.

A national victory by the ANC of more than 60% is likely to improve investor sentiment, according to some analysts, as it will be seen as boosting President Cyril Ramaphosa’s chances of pushing his economic reform agenda. 

By 1.30pm the rand was up 0.14% to R14.3541/$, 0.15% to R16.0596/€, and 0.29% to R18.6411/£. The euro was flat at $1.1188.

Global trade was cautious, with investors keeping a close eye on ongoing US-China trade talks.

The rand strengthened overnight to R14.3075/$ despite some caution as the country awaited the election outcome. The results are expected to be officially announced during the course of the weekend.

Gold was up 0.22% to $1,283.52/oz, while platinum had fallen 0.73% to $855.79. Brent crude was 0.22% higher at $70.46 a barrel, paring earlier losses caused by the intensifying trade tension between China and the US.

Earlier, local mining production figures surprised to the upside, with a contraction of just 1.1% year-on-year in March, from Bloomberg’s expected fall of 7%. February’s contraction, however, was revised up to 8.1%, from 7.5% previously. “While the sector has been adversely affected by weakness in most global commodity prices, we assess that total mining output was also negatively affected by Eskom power cuts that took place in March,” FNB economist, Matlhodi Matsei said.

Manufacturing production grew 1.2% in March despite expectations of a contraction, after the sector saw subdued growth of 0.5% in February. This was in contrast to the expected contraction of 0.2%.

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