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Will Zuma stay or will he go? This weekend the ANC holds the fate of the country and its own future in its hands as its National Executive Committee (NEC) is set to meet. In a highly charged political year, speculation this week is already growing that a second attempt by some party members to dislodge Zuma may happen this weekend. Already, the Rand reacted positively on Tuesday to the news. If Zuma is challenged, this would be the second time his party has done so in the 12 months. When the ANC met in November last year, Derek Hanekom stood up and called for a discussion on Zuma’s future. What transpired was an extended meeting and Zuma escaped unscathed from Irene in Centurion. Since then, much has happened and there’s growing disquiet with his leadership, especially as Cosatu distances itself from Zuma. It may be now or never for the ANC as the voting public watches on. – Gareth van Zyl
(Bloomberg) – South Africa’s rand rose the most in emerging markets as members of the ruling African National Congress were said to plan discussing the removal of President Jacob Zuma. Stocks and bonds also advanced.The currency strengthened as much as 1.5 percent against the U.S. dollar to 13.0218, while the yield on the nation’s rand-denominated bonds due 2026 dropped to the lowest level since March. The FTSE/JSE Africa Banks Index of stocks gained the most in six weeks.
The ANC’s top leadership will discuss the option of removing Zuma from his post at a May 26-28 meeting, according to two senior party officials who will be in attendance and asked not to be identified. The development comes almost two months after the president roiled the nation’s markets when he dismissed Finance Minister Pravin Gordhan.
The rand is rising “on this news, but it may not be as positive as the market is taking it,” said Win Thin, head of emerging-market strategy at Brown Brothers Harriman & Co. in New York. His base-case scenario is that Zuma will stay. “Up until now, ANC lawmakers have fallen into line behind Zuma. This could just be lip service ahead of a vote to keep him in.”
Before Gordhan’s dismissal, the rand had advanced more than 10 percent since the start of the year, the best performance among about 150 currencies worldwide. The nation has since lost its investment grade status at S&P Global Ratings and Fitch Ratings.
Three of the ANC’s top six officials criticised Zuma’s decision to fire Gordhan, while Deputy President Cyril Ramaphosa, who’s a rival to Zuma’s ex-wife to succeed him as party leader in December, said on Sunday that South Africa is threatened with becoming a “mafia state.”
“I think Ramaphosa will take over if Zuma were to be kicked out now. Then the elective conference may be brought forward,” said Kieran Curtis, a London-based director of investment at Standard Life Investments Ltd., which manages about $340 billion in assets. “The market will love it I’m sure, but we still need to get to the other side of the elective conference,” he said.
The rand traded 1 percent stronger at 13.0935 per dollar as of 5:45 p.m. in Johannesburg, while the banking index rose 2.5 percent, led by a 3.6 percent advance in Standard Bank Group Ltd. The yield on the rand bonds fell nine basis points to 8.54 percent.
“If Zuma is removed, the market will react positively, but this is far from a done deal,” said Lucy Qiu, a New York-based analyst at UBS Wealth Management, which oversees more than $1 trillion. She is underweight on the rand and South African equities, but neutral on the nation’s dollar bonds. “The risk is this prolonged uncertainty weighs on confidence and growth.”
Cyril Ramaphosa: The Audio Biography
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