South African election adds uncertainty in markets

The early results from South Africa’s general election suggest that the African National Congress (ANC) will fall short of securing a majority, and may be forced into forming a coalition with the centre-right Democratic Alliance (DA), or either (or both) the far-left Economic Freedom Fighters (EFF) and the uMkhonto we Sizwe (MK). We think investors would welcome the former, but not the latter. In the longer run, we expect South African assets to continue to underperform either way, but more so in the case of an ANC-EFF/MK coalition.