GIVENS KGASI: Strategies for SA traders amid budget delays and policy shifts

Market uncertainty is a familiar challenge for traders, especially in SA, where economic and political events frequently drive volatility. The postponement of the national budget announcement to March 12 following reported disputes over a proposed VAT increase, has amplified market speculation.

Delays in major fiscal policy announcements create a sense of unease among investors, influencing the rand, equity markets and broader trading activity. Rather than reacting with uncertainty, traders can take a strategic approach to managing risk and positioning themselves for potential opportunities during periods of anticipation and volatility.

Managing the unknown

The budget speech provides critical insights into a country’s fiscal direction, debt outlook and potential policy changes that affect various sectors. A delay contributes to further speculation and can result in erratic exchange rate movements. Historically, once a budget is released, markets tend to react sharply, either rallying on positive fiscal measures or declining if concerns about debt levels, taxation or government spending arise. This makes it crucial for traders to remain agile and prepared for different scenarios.

Managing risk effectively during uncertain times requires a disciplined approach. Implementing stop-loss strategies helps traders limit potential losses by setting predefined exit points, reducing exposure to sudden market swings.

Hedging techniques, such as diversifying investments across different asset classes, can mitigate risk. Many traders turn to safe-haven assets such as gold or the dollar when the local currency faces instability. Liquidity management also plays a vital role, ensuring that traders do not overextend themselves and retain sufficient capital to adjust positions as necessary.

Keeping informed

Beyond risk mitigation, staying informed is an essential part of being able to make sound trading decisions. Traders must closely monitor official communications from the National Treasury, as any indications of policy shifts will have immediate market implications. Following reputable financial news sources and using economic calendars to track upcoming announcements allows traders to anticipate potential price movements rather than simply reacting to them.

Periods of fiscal uncertainty also present trading opportunities. The rand often experiences volatility leading up to and immediately following major economic announcements. A weakened currency may present short-selling opportunities against stronger forex pairs, while a positive budget outcome could boost confidence and strengthen the rand.

Thinking differently

Cryptocurrency remains another area of interest, particularly as digital assets continue to be viewed as a hedge against currency depreciation. With the country’s growing crypto adoption, changes in tax policies, such as the proposed VAT increase, could influence trading strategies in the crypto market. In addition, the SA Revenue Service (Sars) has intensified its focus on cryptocurrency taxation, with stricter reporting requirements and enforcement measures, making it even more critical for traders to stay informed and compliant.

The potential VAT hike is particularly significant, as it could affect consumer spending patterns and specific sectors of the economy. Retail, e-commerce and hospitality businesses may face headwinds if higher taxation dampens consumer demand. Conversely, industries such as utilities and telecommunications, which provide essential services, may prove more resilient. Traders should analyse how different sectors might respond and identify potential opportunities within these shifts.

While uncertainty can be unsettling, it also provides an opportunity for traders to refine their strategies and capitalise on market movements. By staying informed, employing disciplined risk management and adapting to changing conditions, traders can navigate volatility with confidence.

• Kgasi is an analyst at international online broker Octa.