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FINANCIAL MARKET JITTERS

Rand plunges after poll shows surge in support for Zuma’s MK party

Rand plunges after poll shows surge in support for Zuma’s MK party
Illustrative image | South African bank notes.(Photo: Rawpixel) | uMkhonto Wesizwe member wearing a cloth bearing former president Jacob Zuma's face outside the Gauteng Division of the High Court in Johannesburg.(Photo: Gallo Images / Fani Mahuntsi). (Photo: Gallo Images / Fani Mahuntsi)

A Bloomberg report on a new poll showing a sharp drop in support for the ANC and a surge in support for former president Jacob Zuma’s uMkhonto Wesizwe party hammered the rand on Wednesday. This underscores just how sensitive the markets and investors are about the 29 May 2024 elections – and just how ruinous Zuma is to sentiment.

The rand on Wednesday got knocked off the strongest levels it reached yet this year after a Bloomberg report about a new poll showing a surge in support for Jacob Zuma’s uMkhonto Wesizwe (MK) party – largely at the expense of the ANC. 

The rand by late Wednesday afternoon had fallen to 18.79/dollar from 18.44/dollar earlier. The losses were initially triggered by the poll and then gained momentum after data showed that US inflation picked up pace in March, raising the prospect that US interest rates will remain high for longer. 

Read more here: Rising home and gas costs pushed US inflation higher than expected in March 

But the big blow to sentiment was the rising political fortunes of Zuma, whose almost two terms in office were devastating for the economy and the rand. 

The Electoral Court earlier this week cleared the way for Zuma to be a parliamentary candidate for MK, dramatically raising the stakes in the election. 

Read more in Daily Maverick: The unstoppable impunities of being Jacob Zuma — with a lot of help from the ANC 

The poll, conducted by the Social Research Foundation (SRF), showed the ANC with only 37% support, while MK got 13%. 

Read more here: ANC support plunges in South African poll as Zuma party surges 

The SFR three months ago, before it conducted its surveys, was forecasting Zuma’s party would only get 1% or 2% of the vote. 

The findings knocked the rand off its 2024 perch and sent it into a tailspin.

Read more here: ZAR/USD: Rand Plunges as Poll Shows Support for ANC Dropping, Zuma Gains – Bloomberg 

One thing markets and investors intensely dislike is uncertainty, and the news around Zuma and his party this week has wrapped South Africa’s political outlook in a cloud of unpredictability. 

The prospects of MK, with its threats of violence and strident embrace of a radical economic transformation agenda – whatever that might be – becoming part of a governing coalition is clearly unnerving. 

Zuma was widely regarded as the “Looter-in-Chief” during the State Capture and Gupta years, and has since been linked to disastrous events such as the July 2021 riots. 

This all underscores just how sensitive the markets and investors are about the 29 May 2024 elections – and just how ruinous Zuma is to market sentiment. 

This matters because the rand’s exchange rate has huge implications for inflation and the cost of imports, which hits the poor the hardest, and in turn the South African Reserve Bank’s setting of interest rates. 

Zuma is suddenly a factor that investors and markets have to consider when deploying their capital. 

The rand looks set for a turbulent ride over the next couple of months. DM 

Gallery

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  • Thaluki Balunga says:

    He he he.. I told you… I’ll be back!!!

  • frances hardie says:

    On what grounds have they sanctioned Zuma’s candidature?

  • David Mark says:

    What am I reading? IOL? “Plunges”. Oh please, for 1.5% movement? Come on DM, don’t be so sensationalist, we expect balanced and fair headlines here, not the shrilling alarmist take other news agencies give us.

    • Jeff Blumberg says:

      Exactly right David. That was no plunge – and besides the Rand had strengthened strongly a few days before – who selects the headline – Ed Stoddard or the editor.

      • Geoff Coles says:

        Agreed Jeff

      • Martin Heynecke Heynecke says:

        Exactly right, a plunge, really Ed, you are the biggest scaremonger of any financial journalist working in SA currently! Get real please! Just yesterday the Vestact newsletter suggested buying USD as the rate was the best for weeks, ditto the Euro.

    • Mario Cremonte says:

      Agreed, far too sensationalistic. But definitely a precursor of what’s to come.

    • Grant S says:

      Spot on. Talk about clutching at straws for sensationalist ‘journalism’. We’d be far better served if our fourth estate friends paid less attention to the radicals/antagonists/pointless politicians that love the spotlight and did some actual reporting. Ask why the Rand or JSE stocks are up and down like yoyo’s when the fundamentals don’t change daily… finance people making money trading for the sake of trading. Easy to spend other peoples money. As Bruce Whitfield loves to preach so convincingly on his business show the day after a stock miraculously surged 3,4,8% the day prior, “some profit taking saw a sell off in share x,y or z” with that price declining by the previous days gain. The Rands k8k fight is obvious, erosion of infrastructure and zero certainty of a way out of an ever increasingly large hole with a government that speaks half truths (on a good day). Whether Zuma is on the ticket or not, SA is viewed with complete scepticism on the international stage. It’s tiresome, but sort out governments failings, spend the budgets that originate from tax payers funds (not from government as so many in this country seem to think) ETHICALLY AND HONESTY (pipe dream) and SA could be an African success story. Sadly, it doesn’t seem to be the way things are done in Africa… or Russia, or China, or India or any of the countries our politicians love to align themselves with. Apologies for the rant!

      • Colin Braude says:

        When Ramaphosa became president, the ZAR was roughly $1 = R12; it is now $1 = R18.8. Hardly a vote of confidence in our current honourable spineless Dear Leader.

        Mind you, when the ANC first got power, in 1994, $1 ≈ R3.5

  • betsy Kee says:

    I despair

  • Lucifer's Consiglieri says:

    Or perhaps it was because the dollar strenghthened on the back of hot US inflation data, which translates to high USD interest rates for longer.

    • Jane Crankshaw says:

      I have to agree with you – all emerging market currencies have “plunged” against the US$ recently – currencies are volatile as are exchanges and even Crypto values! It’s all a game….

  • Jo Soap says:

    So, the worse-than-expected US inflation rate didn’t have any impact?
    I think you need to prove causality.

  • Rae Earl says:

    I would hardly call a drop in value of under 2% a plunge. However, Zuma is an out of control destroyer of national wealth and if he comes back into parliament South Africa will pay dearly. The ANC, EFF, and MK are major players with corruption being at the centre of their DNA. Any successes for this mob in the elections will be disastrous for the SA economy and the welfare of the nation.

    • Gavin Knox says:

      The exchange rate will go well over the top, resulting in totally unaffordable fuel prices, just for starters… the rest will follow suit then watch the supporters cry “but why…. ah, because of white minority capital “….

    • Malcolm McManus says:

      Ja, Hardly a groundbreaking read, but in the same token, I wonder what the exchange rate would do if Zuma had a sudden and fatal heart attack and his soul moved on down to where it belongs. I cant see the exchange rate improving much. I dont think Elon musks satellites are focused much on Zumas fire pool and the enormous thatch rondavel’s around it.

    • William Dryden says:

      I agree whole heartedly with your comments Rae, if Zuma gets back in parliament then South Africa’s economy will collapse.

  • Linden Birns says:

    Rand falling has negative consequences for the economies of other countries across the SADC region.

  • Simon Osler says:

    Where was the poll conducted? Sample size? Recent by-elections in KZN have seen MK polling 23% of the vote, so if the poll was conducted there, it would indicate a drop in support for the Zuma party.
    Details are needed…

  • Don’t want to comment yet…just opened the acc

  • Steven Devilliers says:

    You reap what you sow

  • Alastair Sellick says:

    This is very spurious analysis. The real reason the Rand weakened slightly (this is no plunge) was that US CPI printed stronger than market consensus, and this was actually a story about the Dollar strengthening due to perceived future US / RSA interest rate differentials.

  • Something is really wrong in this country there is to much party’s with corrupt leaders

  • valleytavern says:

    One has to ask..Why does this crook have so much support? Can’t people see the thievery and destruction he has bought on this country? What are they hoping for? Boggles the mind.

  • chris Taylor says:

    Please. The Rand may not have plummeted, but just wake up and smell the rot. The MK party was set up by the RET factor to garner sufficient votes so that after the election it just merges with the ANC, dispatches Rammy to the cattle yards and moves the chosen few back to the trough for feeding time. maybe headed initially by Paul Mashed but later keep it in the family. The total votes the pair will get may not even require a kingmaker, but if they do, there are plenty of good pa’s around without resorting to any effing others. Then the plunge will happen. So try and get voters to understand where we are going if they don’t engage brains.

    • G C says:

      You are spot on, Zuma is just playing games and will be the king maker, he will want plumb postions and contracts as payment for him and his family.

      • Colin Braude says:

        Am I the only thinking that JZ783’s primary concern is staying out of jail?

        His vexatious prosecution of Adv Billy Downer and efforts to get him to recuse himself or be disqualified support this. Very much like another geriatric populist-racist ex-president running for re-election on the other side of the Atlantic.

  • Frank Fettig says:

    The poor aren’t poor enough yet. Vote for poverty, inequality, crime and destruction. Vote Zuma, the wrecking ball.
    I don’t get it…

  • Peter Oosthuizen says:

    Any chance of an arrest – cardiac?

  • Exodus Revelations says:

    Loolest, its all just poppycock, what a storm in teacup, Zuma this, Zuma that, Zuma Zoom, he’s got you at 6s and 9s and your continued biased malicious and slanderous articles are exactly why the polls are showing in his favor.
    The establishment Never learns, Zuma is a Living Martyr because of all your spurious writings that’s have zero basis on facts.
    Best get your exit engines ready because come 1 June, this whole country will have a new leader and His name will have a “Zoom” somewhere.
    If not, then we’re going to have No President for a while coz Cyrilax is going bye bye🤞😄!

  • Lenka Mojau says:

    Oh please, that senseless rhetoric of markets, markets are politians masquerading as economic tools. Now adays we do not have AK-47 or other forms of assault rifles used during the colonilism peak periods but Markets are used as tools to protect the interests of foreigners to loot African resources. An economic tool being used in the wrong way. It is a blatant lie that Zuma was captured by the Gupta’s and that he benefited improperly, should that have been the case he would have been serving a life sentence according to the wishes of his distractes. So it is only allegations that cannot be tested before a Court of law. Only a Court of law can pronounce on a guilt. No body else period. The process of transparency and free speech is being abused, to an extent that some people make serious allegations that taints someone’s reputation.

  • Roger Sheppard says:

    Zuma…setting up a route for his son Dudzane~! No less, no more!

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