Cape Town - The no confidence motion in President Jacob Zuma, proposed by opposition parties and due in Parliament on Tuesday, will fail regardless of whether it ends up being a secret vote or not, according to Peter Attard Montalto, emerging markets economist at Nomura.
About 42 onshore market participants and investors, 52 offshore market participants and investors and 12 political analysts took part in the survey. The responses seem to agree with Nomura's view on the failure of the motion regardless of whether it is a secret vote or not.
The starkest difference in views came from the likelihood of the vote occurring on Tuesday, with political analysts’ modal response being that it was likely to be delayed, foreign investors not quite sure and local investors more confident it would go ahead.
A higher proportion of foreign investors were more confident of the vote one occurring on Tuesday than local investors. In general, however, the clear view was that a secret ballot is unlikely.
Probabilities for success of the motion under an open ballot were all significantly lower with foreign investors around 10%, local investors around 5% and political analysts’ modal view of no chance of it passing.
Nomura expects maybe even 50 to 60 ANC MPs to abstain if it is a secret ballot, but expects only a very small handful to vote with the opposition under either vote format. Overall Nomura attaches a 20% probability on there being a secret ballot, a 10% chance of the motion succeeding if there is an open ballot and a 30% chance if there is a secret ballot.
"There is a higher probability of the vote being passed under a secret ballot – (in other words) that members break with party dictate and vote with their consciences when alone in a secret voting booth. However, ultimately we think most anti-Zuma MPs worry a secret ballot will not be secret because of the involvement of the security services and numbered ballot papers," said Montalto.
A key factor to remember for the vote is that 50%+1 of the total membership is needed to pass the motion, not a simple majority of the votes cast. In other words, the opposition needs 201 votes regardless of whether the ANC is abstaining.
This is also why Nomura attaches a lower probability to it passing as there are some smaller parties that will lend support to Zuma, meaning the opposition cannot be considered a single bloc.
Looking at the absolute probabilities of the motion passing, both local and foreign investors are in line with Nomura at around 14%, political analysts are lower still with a 7.5% chance.
"Local investors seem to have the widest range of uncertainty over the outcome, maybe hinting at a mix of more volatility in local media headlines and the influence of a little hope into the mix, with foreign investors and political analysts lower," said Montalto.
"The low probabilities from investors show the strong upside for South African assets if the motion succeeds, especially if under an open ballot, but if priced into the market, the limited downside for SA assets that might exist after the vote fails."
Only remaining major political event
"After this, the only remaining major political event will be the elective conference in December, with no chance of Zumxit this year, waiting for President Zuma to voluntarily decide to stand down as state president in the first half of next year if his side does win the elective conference," said Montalto.
"The Zumxit issue has preoccupied markets since after Nene-gate, meaning there has been over 18 months of continual speculation - a fair degree of hope too from onshore investors - and then disappointment as each opportunity passed without the said event occurring."
At the start of April this year Nomura said it attached only a 20% probability of Zumxit in any form before the start of next year. The bank still holds the view that the ANC NEC is always going to be the more likely route of Zumxit than via an "external" process in Parliament.
"We still believe President Zuma will eventually stand down, but of his own accord, at the request of his own faction and only if his own side wins in December - as is our baseline – of which Nkosazana Dlamini-Zuma is the current candidate," said Montalto.
He explained that the no confidence motion in Parliament was originally meant to be at the start of May. Then there was a challenge in the Constitutional Court on the format of the vote. While providing a nudge towards a secret ballot, the court, however, left the discretion on the issue up to the Speaker Baleka Mbete – who has yet to confirm what it will be.
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