Emerging South

As follow-up on the post of last Wednesday: Jacob Zuma has indeed been elected as new president of the ANC Party. Below is an overview of the press-reactions:

December 19: The Economist: Zuma comes out on top
“Whatever happens, the relationship between the government, dominated by Mr Mbeki's faithful, and an ANC led by Mr Zuma will be awkward. The next few months could see either a patching-up of the rift over the succession or a purge inside the party of Mbeki loyalists. There are even questions over whether Mr Mbeki will finish his full term as the country's president, although Mr Zuma has said that he sees no reason for his early departure.”

December 19: UBS analysis: Jacob Zuma won leadership of South Africa’s Ruling ANC Party
 “Looking at ZAR and equity levels before and after the announcement, it appears that the markets have not priced in a big political risk premium on South Africa, despite Zuma's background in trade union politics, legal wrangles (prosecutors to decide about charges soon), and less than clear stance on free market policies. Zuma did pledge not to change the country's economic policies if elected as president. It seems the market views him in the same vein as Lula in Brazil, the Congress coalition in India and PM Fico in Slovakia, all of who were initially feared to be populist, but eventually stuck to free market policies in practice. We think this is a reasonable base case view for Zuma as well, but we would not get complacent on this, and point to one big risk. Lula, Fico and India's communist backed coalition have governed through times of strength in the economic cycle. By contrast, the next ANC leader may find himself at the helm of a slowing South African economy, and potentially also facing more tricky international credit conditions. In our view, this increases the risk of populist policies.”

December 19: Danske Bank Research: South Africa: An end of the good days?
“With Zuma’s victory, South African politics has lost a lot of its credibility abroad. Furthermore, this is also clearly bad news for the South African FX and fixed income markets, and over the course of 2008 we in general recommend being short in both South African FX and fixed income markets. Furthermore, we forecast a steepening of the South African yield curve.”

December 19: Wall Street Journal: South African succession
“The most gripping political drama yet in post-apartheid South Africa ended yesterday when the African National Congress, in power since 1994, picked a controversial Zulu politician to lead the party. Under different management, the continent's strongest democracy and largest economy can build on its recent successes, or, like so many of its neighbors, fall off track.”

December 19: Newsweek: Shedding Mandela’s Mantle: Could the controversial Jacob Zuma be a good president?
“Economically, Zuma is not likely to deviate much from Mbeki's course. "Mbeki is a social democrat whose economic choices were limited by prevailing conditions," says Adam Habib, a political commentator and deputy vice chancellor of the University of Johannesburg. "[Zuma] might have better rapport with the population, but he won't fundamentally change macroeconomic policy." Habib adds that while Zuma's victory will deepen the bitter divisions in the ANC, it will also ease fractious relations with its political partners, the pro-Zuma Congress of South African Trade Unions and the South African Communist Party.”

December 19: Marketwatch: South African shares drop following Zuma victory
“While we remain very positive on South Africa's long-term outlook, we do not believe that orthodox economic policies have been entirely institutionalized yet and that some policy slippage is possible, said Win Thin, senior currency strategist at Brown Brothers Harriman, in a research note. Investors will remain wary, and will be looking for concrete signs of policy continuity,Thin said. “

December 20: Reuters: South Africa’s Zuma tries to reassure investors
"There is ... no reason why the domestic and international business community, or any other sector, should be uneasy," he said."We have to strengthen the relationships with organised business so that we can continue growing the South African economy. Clearly, we have a lot of work to do," Zuma said.Underlining the huge change of style at the top of South Africa's dominant party, Zuma danced and sang his signature anti-apartheid song, "Bring me my machine gun" with the delegates as the conference ended.Mbeki, disliked by the rank and file for his haughty intellectual manner, barely smiled as he sat and watched Zuma, whose charisma and common touch are in sharp contrast to the outgoing leader.