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Business confidence rises on post-election hopes

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An election official sets up tape during preparations for the elections at a voting station in Cape Town. Picture: Sumaya Hisham/Reuters
An election official sets up tape during preparations for the elections at a voting station in Cape Town. Picture: Sumaya Hisham/Reuters

South Africa’s business confidence rose in April as retail sales and import volumes improved alongside a firmer currency, a survey showed on Tuesday, lifting sentiment from a seven-month low as businesses also saw a stable post-election policy environment.

The South African Chamber of Commerce and Industry’s monthly business confidence index rose to 93.7 in April from 91.8 in March, the business body said.

The reading was the highest since January, and had also been soothed by the increased focus on the economy in the run up to parliamentary and provincial elections on Wednesday.

“The common theme of election manifesto policies among the parties to drive economic growth and job creation seems to resonate well with the markets,” the chamber of commerce and industry said.

Five of the 13 sub-indices improved compared to March, while five were unchanged and three declining.

Business reported an improved exchange rate against the major trading and investment currencies, higher share prices on the Johannesburg Stock Exchange, increased real value building plans passed, real retail sales, and merchandise import volumes.

The rand has gained close to 3% against the dollar since the beginning of April, better than many of its emerging market peers, and the Top-40 Index has rallied nearly 7%, shooting through the 52 000 mark.

“The outcome of elections should bring more clarity to business and enhance better planning and decision making,” the chamber said.

Meanwhile the rand steadied against the US dollar on Tuesday ahead of Wednesday’s elections for Parliament and provincial legislatures.

Stocks weakened as investors waited for direction.

At 5.10pm, the rand traded at 14.45 a dollar, unchanged from its New York close on Monday.

While a victory for the ruling ANC is almost certain, its majority is likely to shrink, which could constrain President Cyril Ramaphosa’s reforms and keep the economy on a slow burn.

“Markets expect a rally on a strong ANC win, with potentially marked rand strength,” Investec economist Annabel Bishop said in a note.

“However, in order to shift the full focus of internal party politics to the economy, particularly job creation driven by strong economic growth, will likely require some patience at best, and repair and improvements to governance in government structures is also needed.”

In fixed income, the yield on the benchmark government bond due in 2026 added 2 basis points to 8.6%.

On the bourse, the blue-chip Top-40 share index fell 1.2% to 51 707 points while the broader All-Share index was down 1.03% at 58 110 points.

“Ahead of the elections there is just too much uncertainty so there are a lot of people sitting on the sidelines,” said Greg Davies, equities trader at Crates Capital.

Among the biggest declines were general retailers, which fell 2.55%.

Massmart closed down 3.99% to R87.50, Truworths fell 3.68% to R76.10 and TFG weakened 3.63% to R189.55.

Meanwhile, the Electoral Commission says it is ready for the 26 744 565 South Africans on the voters’ roll who will make their mark for the 2019 national and provincial elections.

The provinces have indicated that the special votes, which kicked off on Monday, were a test run for their planning and preparations.

Hot spots have been identified and will be prioritised, and more than 51 000 police officers will be deployed at the voting stations across the country.

A capacity of five teams will be maintained at national level to be deployed to any part of the country where the situation requires urgent intervention to deal with high risk situations.

The highest risk areas are the North West and KwaZulu-Natal provinces.

Voting stations will be open from 7am to 9pm tomorrow, and election day has been declared a public holiday to facilitate voting. – Additional reporting by SAnews.gov.za

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