SA markets rebound as  ANC denies resignation plans

South Africa’s rand and government bonds rebounded on Friday, after the chairman of the ruling ANC party rebutted speculation that President Cyril Ramaphosa was considering resigning over accusations he may have violated the constitution.

Ramaphosa’s political future still hangs in the balance, with the national executive of his governing African National Congress (ANC) party set to meet and discuss the report later in the day.

Thursday’s steep market sell-off relented on Friday, with the rand up 1,6 percent at R17.27 against the dollar, although that was still below the levels at which it had been trading before the speculation about Ramaphosa.

On Thursday, the rand plunged more than 4 percent at one stage, after news website News24 said Ramaphosa was likely to resign within hours, before cutting losses to end about 2 percent weaker.

Rand volatility gauges have also soared, especially the highly-sensitive 1-week gauge which stayed on Friday at its highest level since the peak of Covid fears in early 2020.

“The knee-jerk reaction yesterday was to just sell the rand,” said Per Hammarlund, chief emerging markets strategist at SEB in the Swedish capital of Stockholm.

“But given that (Ramaphosa is) not resigning immediately… plus given that he has a more business-friendly profile than many other(s), markets are pinning their hopes on him staying in office.”

South Africa’s bonds also staged a partial recovery. Longer-dated sovereign dollar-denominated bonds that had fallen furthest rebounded the most, with the 2052 maturity rising 1,3 cents to 87,012 cents in the dollar, Tradeweb data showed.

The local 10-year benchmark also recovered some of Thursday’s losses, which were the biggest since the Covid market rout of early 2020, with the yield down 30.5 basis points at 10,635 percent.

Shares in Johannesburg fell, though, after having risen slightly in the previous session. The all-share index was down 0,75 percent to 74,458 points, while the Top 40 index was down 0,8 percent to 68,316 points.

An index of bank shares, which suffered losses of more than 8 percent on Thursday, rebounded however, to stand up 2,3 percent at 9,858 points.

Ramaphosa’s spokesman told reporters on Thursday the president still had “all options on the table” over the panel report, and was still consulting with a broad range of people over the next steps.

The panel investigated accusations that thieves found and stole millions of dollars of cash stuffed into furniture at Ramaphosa’s game farm in 2020.

The theft, which only came to light in June, has raised questions about how Ramaphosa, who came to power on the promise to fight graft, acquired the money and whether he declared it.

The president has said a much smaller amount of money – the proceeds of game sales – was taken. He has denied any wrongdoing and has not been charged with any crimes.

On Friday, ANC chairman Gwede Mantashe told public broadcaster SABC that the party had a responsibility to reassure markets and society, pointing to the rand plunge of the previous day as a reason for Ramaphosa to stay on. – Reuters

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