The African National Congress (ANC) won South Africa’s general election on Saturday, but saw its share of the vote fall relative to previous elections. This reflects the nations frustration around corruption scandals as well as the still present racial inequalities that remain entrenched in the country. This marked the first election that the ANC won with less than 60% of the vote.
The victory secures enough seats in parliament to give President Cyril Ramaphosa another five-year term in office but may leave him short with regards to battling party rivals on reforms. The Independent Electoral Commission results showed that the ANC secured 57.50% of the vote, while the main opposition party, the Democratic Alliance (DA) picked up 20.80% of the vote. Both of these figures come in below the 2014 results, where the ANC and the DA had 62.00% and 22.00%, respectively. One party that has shown growth are the Economic Freedom Fighters (EFF), with their share of the votes growing from 6.00% in 2014, to 10.8% in 2019.
Ramaphosa’s first full presidential term should start later this month, after nomination by his party’s parliamentary caucus and an inauguration ceremony.
South African markets ended the week lower reflecting the global equity market response to the increased trade tensions between the US and China. The All Share index fell by 4.31% to close at 56 780.80. All major sectors had a tough week with Resources (-4.80%), Industrials (-5.74%) and Financials (-1.73%) closing in the red.
Market Moves of the Week
During the week, China backed away from multiple concessions that were made earlier in the negotiation towards a trade agreement with the US. The sharp reversal in China’s position sparked the Trump administration to increase levies from 10% to 25% on $200.00 billion worth of goods imported from China, while threatening to impose a 25% tariff on a further $325.00 billion worth of Chinese imports. China have promised to make “appropriate countermeasures” but the hope for a deal have now diminished.
Credit growth in China slowed, as the total social financing (a measure of credit and liquidity in the Chinese economy) grew at a slower pace than anticipated in April. Analysts expect the slowdown to prompt China’s central bank to further ease monetary policy (lowering interest rates), especially while trade tensions with the US grow.
Global markets ended the week in negative territory as increased tension between US-China trade tariffs fell through to equity markets. The Dow Jones (-2.12%), S&P 500 (-2.18%) and the Nasdaq (-3.03%) all finished the week lower. European markets also fell, the Euro Stoxx 50 and the FTSE 100 ended the week lower by 4.04% and 2.40%, respectively.
The rand finished the week stronger, gaining 1.34% relative to the greenback.
Chart of the Week
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