South Africa enjoyed a free and fair election—quick and easy with little, if any, real problems.
The MK party played a major part, inadvertently, by taking votes away from the EFF and the ANC. The latter party lost a lot more seats than they—and most of us—thought they would. This has now paved the way for a new and, hopefully, dynamic government. For the first time, the DA and other minority parties will fulfil a meaningful part of government and assist the ANC in providing a better quality of leadership. It may still be far from perfect but could mark a great improvement.
The Rand has responded favourably and may still strengthen against other currencies. The JSE could be one of the better-performing bourses around the world over the next 12 months.
Please note that the lights have not gone out since the elections, as many thought would happen. Eskom is working much better, with very few unplanned breakdowns.
These elections have given birth to a new South Africa. In our opinion, the combination of parties forming the Government of National Unity is better than anybody thought it could be, serving most of the voters of the country. Alas, ‘the proof is in the pudding’—in this case, the governing. Hopefully, they can more or less get that right, and then we may pay fewer Rands for a cup of coffee in Europe!
Other factors that lend South Africa the potential to perform well include our robust and dynamic Constitution, a free and active press that keeps our government on its toes, and a dynamic CEO association that has been giving the government much-needed help at Eskom and the Ports.
As for the rest of the world, a lot of it is in a mess. Lots of elections are still to happen this year, with England and France holding snap elections and the USA later in November. There is a big shift to the right, which may be a good thing.
China has been buying gold and, by doing so, offloading dollars, which increases the number of dollars in circulation, thereby putting upward pressure on inflation and interest rates. Interest rates are what the Fed is anxious to lower once inflation has been tamed and brought under control. However, China’s and other countries’ purchases of gold do not bode well for the desired effect of decreased inflation.
I think you will agree that the elections have given birth to a new dawn, a new South Africa—where the lights don’t go out (touch wood!), where people work in better harmony and, in doing so, benefit both the poor and the rich.
May South Africa shine in this new dawn.
Cheers for now,
Nick Russell
Certified Financial Planner CFP®
Please note: This article does not constitute advice