The slide from Ramaphoria to Ramaphobia is complete

There’s no sign of it now.

“The change in the political leadership after Cyril Ramaphosa took power provided a boost to investor sentiment, sparking a rally in the rand that has now been reversed,” Mark Bohlund, an Africa economist at Bloomberg Economics, wrote in a report.

“Foreign investors could become concerned about renewed lapses in fiscal consolidation or the government’s ability to rein in financial risks from state-owned enterprises.”

Things started changing in April as rising US interest rates and a strengthening dollar began to sap demand for emerging-market assets.

While crises in Argentina, Turkey and Russia provided the context, homegrown problems fuelled the retreat.

The economy contracted in the first quarter as the current-account deficit widened, highlighting the country’s vulnerability to capital outflows.

Mining production, once the engine of the economy, has slumped, and manufacturing and consumer spending have struggled to pick up the slack.

A widening budget gap has limited Ramaphosa’s ability to boost infrastructure and social spending.

“SA faces domestic challenges at a time when the external backdrop is less positive for risky assets,” said Piotr Matys, a London-based emerging-market strategist at Rabobank. “The US dollar is broadly stronger on the back of widening interest-rate differentials, the US and China are involved in a trade war, and Turkey is a major warning signal for other economies which rely on volatile capital inflows to finance current-account deficits.”

Populist faction

The tipping point came on August 1, when Ramaphosa, bending to the populist faction of his party, announced that he would seek a constitutional amendment to allow expropriation of land without compensation.