Elections 2024: ‘Wait and see mode’: Investors waiting to see where the chips fall at the polls

As South Africans rally to cross their X’s next to their chosen candidates in the upcoming elections, economic uncertainty fills the boardrooms of major corporations. 

The 2024 national elections will take part on 29 May. 

In the meantime, winds of change are blowing in the South African political landscape, and there’s no way to tell where the chips will fall once the dust has settled. 

While politicians are competing to win votes, investors are clutching onto their handbags hoping for a business-friendly election outcome.

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‘Wrong party rising to power’

Speaking to The Citizen, economist Dawie Roodt said a major concern for the private sector and international investors was the possibility of the ‘wrong party’ rising to power.

“The wrong [parties] are [organisations] that are not going to be good for the economy, and they are typically [parties] with these funny ideologies or policy proposals – like state banks or nationalisation of everything,” Roodt said.

He believes that political parties with leftist ideologies and policies were a potential threat to the private sector, adding that most investors are holding onto their money pending the upcoming elections.

“The private sector is on wait-and-see mode. They are simply waiting to see what’s going to happen in the election before they commit more investments to the economy.” 

The ideal outcome? Roodt said private sector-friendly policies, right-wing ideologies and a government with the right capacity to implement them would boost the economy.

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‘JSE is very cheap’

Reflecting on the current state of the market, Roodt said the rand was undervalued, explaining it was a sign that both local and foreign investors were not as confident about investing in South Africa.

“South African financial assets are very cheap, the JSE (Johannesburg Stock Exchange) is very cheap, the capital market is very attractive, and the rand is very much undervalued,” he said.

The economist also emphasised the importance of a competent government post-elections, explaining that would boost economic growth.

“If we see a good government emerging after the elections, I won’t be surprised if we see a huge positive reaction on the financial markets, which will spill over into the economy as well. The wrong government will lead to the opposite.

“We don’t even need a very good government, we just a need a government that’s less damaging to the economy than what the ANC (African National Congress) has been – especially in the last 15 years.”

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Left or right? Game changing election

As the 30th since the dawn of democracy, this year’s national election has been deemed by many as a game-changing election.

Political analysts have repeatedly highlighted the ruling party’s declining popularity in recent years, amid a government marked by corruption, state capture and failing infrastructure.

“I believe that we are in a period of political transition in SA. I think the ANC is still going to be part of SA government for the next five years, but [with] reduced power,” Roodt echoed.

With a new government comes policy reform, as is expected in a democratic state. Whether good, or bad, it all depends on who stands to benefit – a classic case of one man’s loss being another man’s gain.

“I do believe there will be policy changes, either left or right – or more of the same, which is a move to the left in any case, if you look at the manifesto of the ANC.”

“The ideal outcome would be having more market-friendly policies, [but] the ANC has become less market-friendly,” Roodt said, highlighting an ideological shift in the ANC’s policies over the years.

“The ANC has been moving to the left in recent years. They’re becoming more populist, socialist, and interventionist,” Roodt said.

He further explained that in the event of a coalition with the Economic Freedom Fighters (EFF) or other like-minded parties, the ANC would continue on a leftist trajectory.

“A collation with the EFF will probably lead to a further move to the left.”

Conversely, he said a coalition with a right-leaning party would likely result in the ANC reverting to its “old” policies, adding “that will be a good case scenario”.

“A coalition with parties to the right would be the best possible outcome,” Roodt said.

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