Home Opinion and Features Anchor Capital cautions SA investors on election year uncertainties

Anchor Capital cautions SA investors on election year uncertainties


Anchor Capital, which has R225 billion in assets under management, said South Africa was “going to be different” post the May election.

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SOUTH African investors are expressing caution regarding the country’s investment outlook for the year, given the potential for a coalition government arising from the upcoming general election.

Anchor Capital, which has R225 billion in assets under management, yesterday (MON) said South Africa was “going to be different” post the May election.

The asset manager has drafted four possible scenarios, the first being the ruling African National Congress (ANC) winning the election with a 50-55% majority.

In this scenario, Anchor said the ANC would continue governing with a lot of challenges continuing to persist, and things getting worse after 2026 when the sitting president ends his term as the party president.

In the second scenario, the ANC archives 45-49% of the vote, and gets into a coalition with one of the big opposition parties but at the cost of losing a key executive positions such as the deputy presidency or the finance minister.

If the ANC gets 40-45% of the vote, Anchor said the opposition parties might work together to remove the ANC from power and a new era would be heralded with a new government and new rules.

In the event the ANC wins less than 40% of the vote, Anchor foresees the headwinds facing the country requiring a dose of sobriety where the ANC governs with the DA.

Anchor CEO and co-chief investment officer Peter Armitage said the ANC was likely to slip below 50%, but the party was expected to remain in power.

Armitage said the nature of possible coalitions has South Africa on edge, and the trepidation heading into this year’s general election will likely have a greater impact on markets than the eventual outcome.

“Voter turnout has been a significant factor in South Africa’s elections as it has declined to 65% from 88% in 1994 mainly due to lack of interest by voters. ANC voters are down 17-57.5%. There are a lot of people who kind of guess that [the ANC] will go below 40%, but that is a radical view,” Armitage said.

“It did go down from 62% to 57% from 2014 to 2019. The ANC at 50-55%, we don’t think it’s a great outcome at all. We will get more of the same, a new ANC president in 2026, which means Ramaphosa will be a lame duck for two years. It’s not a great scenario at all.

“So from an election perspective, it creates uncertainty. I think the outcome that the markets wouldn’t like is an ANC coalition with the EFF.

“The 40-45% scenario would be a very interesting angle, and scenario four which would be ideal for markets would be ANC below 40% and having to work with the DA. I think markets are likely to be volatile before the election.”

Armitage said there were three big events this year that investors were looking at and worried about.

He said the markets were going to observe closely the general election and what happens when the terms of office of the SA Revenue Service Commissioner and the SA Reserve Bank Governor come to an end on May 1 and November 9, respectively.

In terms of earnings, Anchor’s base case is that conditions will not get dramatically worse for the local companies as disappointing as the under-performance of the local economy might be, as was the case in 2023.

However, Anchor expects another eventful year ahead for the JSE with the total return forecast of 10% as its base case.

Anchor also expects load shedding to have at least reached a peak, with private generation expected to pick up strongly in 2024, coupled with the fact that South Africans have become far better at coping with the disruptions that come with load shedding.


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