• Ramaphosa elected ANC leader with 52% of the vote
• Victory priced in but more rand volatility likely
• Twitter shares spike on takeover speculation
• Strong equities sentiment continues in Asia
• EPS expectations expanding for the first time since 2010
By Michael McKenna
Union leader Cyril Ramaphosa has been elected leader of the African National Congress, South Africa's ruling political party, with the ZAR rallying into the win and then retreating as the exuberance consolidated.
According to Saxo Bank head of forex strategy John J Hardy, Ramaphosa's win is a hopeful sign for the country but how much success he will have implementing his planned reforms – particularly given his narrow, 52% victory – remains to be seen.
"Another question that remains is whether [South African president] Jacob Zuma will step aside, or whether Ramapahosa will need to wait until the 2019 election," Hardy adds.
The rand remains hot, trading at 12.8052 versus USD (as compared with 13.70 one week ago), but is consolidating in the wake of Ramaphosa's victory with USDZAR up from just above 12.50 overnight.
Beyond the ZAR, Hardy reports that the USD largely shrugged off President Trump's national security address Monday, despite its taking a more measured tone on China than many feared (the phrase "economic aggression" was notably absent, for instance).
On the calendar, the week's major FX events are tomorrow's Riksbank meeting in Sweden and Friday's US PCE inflation release.
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Source: Saxo Bank
In stocks, Saxo equities head Peter Garnry reports that Twitter shares are flying high, up 11% Monday (and over 40% since late October) on renewed speculation on a takeover. The latest round of chatter was triggered by a photo taken last Thursday
of Twitter head Jack Dorsey and Goldman Sachs CEO Lloyd Blankfein together at Twitter's San Francisco headquarters.
Beyond Twitter, Garnry reports that sentiment remains bullish in Asia, led by China, adding that earnings-per-share expectations are on the rise for the first time since 2010, potentially marking a shift from a valuation- to a growth-centric narrative.
As for Twitter, however, Garnry says that, all speculation aside, "Twitter is no longer a growing business" and points to the firm's negative rvenues growth.
On the Ramaphosa win, Saxo's equities head points to the potential for a rally in South African shares, which are down 7% from their November peak.
"South Africa has a unique position as a gateway to sub-Saharan Africa," notes Garnry, adding that this status could prove a boon given China's interest in the region.
Pretoria, South Africa: The Zuma era is coming to a close. Photo: Shutterstock