Post-poll vista for investors

HOPE: DON’T GET DISTRACTED FROM FINANCIAL PLAN

Sitting on the investment sidelines is not a good idea.

However, the constitution empowers the president to implement certain decisions, notably appointing Cabinet ministers. So there’s much Ramaphosa can do to reform government and state-owned enterprises (SOEs). His new Cabinet will be the first test; investors would like to see a smaller body, largely of skilled members with integrity.

Policy certainty

Corruption has increased and, as shown by The Commission of Inquiry into State Capture testimony, corruption-fighting institutions were deliberately hollowed out along with the capture of certain policy-making bodies and SOEs. These institutions are now being rebuilt. The SOE clean-up is also under way.

What investors and businesses crave most is policy certainty and a state that gets the basics right (like keeping the lights on). A business facing rules it finds constraining will try and manage these as best it can. But if it’s not sure what the rules will be in the near future, it might deploy capital elsewhere.

Demand remains constrained by factors outside political control: slow real household income growth, pallid commodity prices and global uncertainty.

Government’s clean-up is likely to continue; that should improve business confidence, but the prospects for substantial progrowth economic policy reforms will be limited by many factors that existed before the election.

A cleaner, more competent government will help the country’s economic performance over time, but sustained growth requires policy changes and more certainty on contentious issues.

The future

There’s hope for SA. We take for granted that elections will represent the will of voters and that outcomes will be fully transparent. Importantly, the institutions managing monetary and fiscal policy (Sarb and Treasury) retain global credibility.

Investors can spread their wings globally, using the best opportunities locally and abroad. Conflicting views on the election’s impact have seen many investors sit on the sidelines.

But markets rallied well before the vote, and these investors missed out. There will be a deluge of post-election analysis. Don’t let it distract you from achieving your investment goals.

Dave Mohr is chief investment strategist and Izak Odendaal investment strategist at Old Mutual Multi-Managers