Will the elections affect the market?

The South African electorate has been voting in the government for the next five years. There has been a lot of talk about whether the expected next President of the Republic, Jacob Zuma, will be a good or bad choice if the ANC is re-elected, which is widely expected. In South Africa we vote for a party not an individual, which means that the party with the most votes gets to appoint the President. The results are not yet in, but it looks likely that the ANC will win. So what will the effects of the election be on the market?

 

• Risk is already priced in
• Rand not expected to be affected
• Market could respond positively 

The best thing you can do is go on as usual and plan a budget.

These are the opinions of various commentators in the financial papers.

Fin24 looked at the factors in the market that may come in to play due to the election. Historically the market rallies and goes up after the elections before returning to the fundamental underlying levels it should be at. This means we may get a market bonus for a few months before the effects of the credit crunch start weighing the market down again. An economist interviewed in the article said ' we could be pleasantly surprised with the performance of the market after the election'.

Business Report had a look at the Rand and its current weakness and their interviewed experts were of the opinion that the weakness of the Rand at the moment was not related to the elections and they further said 'We can't, in fact, see the result having much influence'. Politicsweb noted that Trevor Manuel is expected to stay on after the election and this should go some way to quieting any jitters that may be felt as the new administration comes in. The article noted that as the votes started to be counted and results were slowly being published the Rand was generally steady.