South African assets are bouncing back as investors are hopeful about the outcome of the ongoing coalition talks between political parties.
The rand value increased by as much as 1.6% on Monday, its most significant one-day increase since December 14.
The positive momentum follows the African National Congress’ failure to secure a majority for the first time in three decades. Notably, South Africa’s dollar bonds performed strongly, ranking among the top in a Bloomberg index of emerging and frontier sovereign Eurobonds.
A potential coalition between the ANC and DA, with the latter gaining slight support since 2019, is eagerly anticipated by investors. This alliance could bring stability, fiscal prudence, and a transformative shift in South Africa’s political scene away from apartheid’s legacy.
For the DA, it offers access to governance, a voice in legislation, and a chance to combat corruption, yet risks alienating supporters who sought to oust the ANC from power.
MK party, established by Former president Jacob Zuma, has gained unexpected favor by securing 58 parliamentary seats and emerging as the prominent party in Kwa Zulu Natal Province.
Zuma mirrors a Trump-style assault on the voting system, gathering support from minor parties. Yet, with the ANC and EFF acknowledging the outcome, MK’s isolation appears looming.