Why Nedbank thinks a post-election rand rally is unlikely
ANC clear majority already factored in and the only impetus upward might be from Ramaphosa’s cabinet line-up
Investors betting on a post-election rally in the rand, which fell last week by the most since February, similar to what happened after Cyril Ramaphosa won the presidency of the ANC in December 2017, are likely to be disappointed, according to Nedbank's investment-banking arm. With the ANC set for a clear majority in the May 8 poll, it is unlikely the result will offer surprises that may sway the market, and the focus will be more on Ramaphosa’s cabinet picks and the prospect of reforms needed to boost the economy, Nedbank corporate and investment banking strategist Mehul Daya said in a note published on Friday. The bank recommends selling the rand close to R14/$, and buying it when it weakens towards R14.50/$, he said. “Investors and credit rating agencies will likely be focused on actual policy implementation by the government, which is more long term, rather than just on discussions to drive domestic economic growth,” Daya said. The currency dropped 2.16% last week to R14.3752/$...
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