The rand and South African government bonds put in brisk gains against the dollar on Monday as the rumours of Ramaphosa’s re-election to a second term as ANC president transformed into reality by midday. 

About noon, the rand was fetching 17.25/dollar after starting the day at 17.70/dlr, regaining ground lost last week as the ANC’s elective conference loomed. Meanwhile, the yield on the 10-year government bond fell to 10.08% from 10.33% – according to data compiled by Trading Economics – an initial sign that Enoch Godongwana is expected to remain in the post of finance minister and maintain his sputtering drive to reign in government debt levels. 

Markets do not like uncertainty and if Zweli Mkhize had replaced Ramaphosa, there were concerns about the direction he would have taken ANC policy as he would have been beholden to the Radical Economic Transformation (RET) wing of the party which is linked to former president Jacob Zuma and the insidious State Capture project. 

Call it “Ramaphoria lite”, but the days and weeks ahead will set the tone for financial markets, which are relatively illiquid at this time of the year, a state of affairs that can trigger big swings. 

The ANC’s “Top Seven” has characters linked to State Capture – or who are widely regarded as simply incompetent – so it remains to be seen if Ramaphosa now has the political capital to pursue meaningful economic reform against the backdrop of a failing and ailing state. 

“A Ramaphosa victory is all the market cares about and will ignore the mess in the rest of the Top Seven, which is a threat to him and the likely less-conducive National Executive Committee to come before the end of the conference. But the market will wake up to the noise and dramas as they encircle and limit the President’s space to move in the new year – reforms will be harder, though not impossible,” Peter Attard Montalto, head of Capital Markets Research at consultancy Intellidex, told Business Maverick. 

He also noted that the re-election of Mineral Resources and Energy Minister Gwede Mantashe as ANC chairperson “is not positive for evidence and fact-based energy policymaking”.

Mantashe remains a champion of coal, the fossil fuel which is fast losing favour on a global scale as the green energy transition kicks into high gear. He has also overseen dysfunction and paralysis at the Department of Minerals and Energy, starving South Africa’s mining sector of badly needed investment and new exploration projects. 

On the JSE, the All Share Index was little changed at midday on Monday, but the stock market is generally not as sensitive to political events as the rand and bond markets. 

A post-holiday hangover looms on the horizon as Ramaphosa attempts to stamp his authority on the party and economic policy. The market reaction in January will probably be more telling than the knee-jerk response that unfolded on Monday. DM/BM