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South African stocks and currency rally as Zuma’s luck runs out

by | 15 Feb, 2018

Zuma’s luck finally ran out

The South African President Jacob Zuma resigned from his post with immediate effect yesterday after succumbing to intense pressure from his party, the ANC.

It was unclear whether Zuma would leave of his own accord, but the alternative was that he would face a vote of no confidence in parliament, so his resignation has made life easier for both him and the party. Zuma has been involved in several public scandals including using public funds to upgrade his private home in Nklanda, and has faced criticism for his ties to the controversial Gupta family, the Indian-born businessmen who some say wield too much power in South Africa’s political system. An inquiry began

Despite the optimism over him stepping down from high office, other political groups within the country believe the problem is the ANC itself and that his successor Cyril Ramaphosa will simply provide a continuation of economic stagnation and social inequality. Julis Malema, the leader of South Africa’s far-left revolutionary party, the Economic Freedom Fighters, today said: “Even those who will be elected after Jacob Zuma will be nothing but substitutes in the same corruption game. If Ramaphosa becomes President, he will simply replace Zuma’s corruption stooges with his own stooges.” While calling for early elections, Malema claimed his party was a key reason why Zuma surrendered to political pressure, saying: “Jacob Zuma has finally surrendered to the political pressure which the EFF was at the centre of for the past three years.”

Zuma’s departure almost certaintly clears the way for his successor Ramaphosa to assume power, and while the EFF may disagree that he is the best man for the job, investors seem to feel confident about a brighter future judging by the performance of the markets after the resignation announcement. Better days may well be ahead for the South African economy, so keep an eye on the Rand and the FTSE South Africa Index – both of them are rallying hard today! The news has also boosted firms tied to South Africa like Old Mutual and mining giant Anglo American.

Related: South Africa in focus: Jacob Zuma stays defiant in face of ANC pressure

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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