Zuma’s brazen Cabinet reshuffle late in the evening of 30 March has caused much uncertainty in the markets, with the rand slipping 7.93% last week and SA 10-year bond yields increasing from 8.365% to 8.91%. Treasury had gone to the market on Friday to raise R600m in short-term funding, but received bids for only R200m due to investor concerns about the events that took place.
The reshuffle has led to a public outcry and a number of protests, with three of the top six members of the ANC’s National Executive Committee – the party’s highest decision-making body – publicly voicing their concern on the matter. Opposition parties have also called for a parliamentary vote on a motion of no confidence in Zuma.
The markets will closely watch any statements by new finance minister Malusi Gigaba and his deputy, Sfiso Buthelezi, as well as any statements by the ratings agencies. Following the reshuffle, Moody’s is now widely expected to downgrade SA’s sovereign debt by one notch later this week, which will bring it one notch above junk, and in line with the current ratings on SA’s debt by ratings agencies Fitch and Standard & Poor’s.
Other important economic announcements this week:
- SA Manufacturing Purchasing Managers’ Index (PMI) and Total New Vehicle Sales
- US ISM Manufacturing PMI
- SA Standard Bank PMI
- US ADP Non-Farm Payrolls and FOMC Meeting Minutes
- SA Foreign Exchange Reserves
- US Unemployment Change
Giacomo Bonavera is head of foreign exchange trading at Capilis Asset Managers. Click here to visit the firm’s website.