As SA’s financial markets have become more integrated with the rest of the world, the decisions that drive share prices are a "yes" or "no" to SA, rather than whether company A is expected to outperform company B. As a result, share prices move together and are affected by perceptions of the country as a whole. That has serious consequences for how business leaders need to think about politics. Research by Daniel Polakow, a director of Prescient Securities, shows that this "dispersion deflation" of share prices has been particularly high since the financial crisis. What he calls "cross-sectional volatility" has been in decline as share price movements become more homogenised. Our companies are all in the same basket, which is moved by decisions over whether to buy or sell SA, rather than particular firms within it. This has important lessons for company boards and management. If their job is to maximise shareholder value, then their tasks have changed. They now have to be much more ...

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