Category Archives: Market Reports

The Confidential Report – October 2018

South Africa has become a battleground between good and evil, every bit as exciting and unpredictable as Game of Thrones or Harry Potter. On the one hand the forces of populism are seeking to drag the country backwards towards racism, entitlement, maladministration, corruption, nepotism and incompetence. On the other, the “good men” of the ANC like Ramaphosa, Gordhan, Manuel, Nene and others are striving to pull the country back from the brink – eliminating corruption, installing competent people in the SOEs and adopting better laws to govern key sectors. The good guys have already won many preliminary battles and weakened the position of the bad guys quite considerably. For example, the elimination of nuclear energy from our resource plan is a major step forward – and so is the Constitutional Court judgement which allows labour brokers to continue in business. There are obviously many more battles to be fought – and much has to be delayed until after the election in May next year. But the trend is in the right direction. At the same time, as we have been conducting our own internal battles, the battles of other emerging economies (like Turkey and Argentina) and the decisions of the American president have impacted on us. This is most visible in the volatility of our currency which continues to be the best and clearest barometer of exactly where South Africa is and how it is doing. If you want to know how good or bad things really are, study the rand/US$ chart. Everything of importance in this country, both internal and external is discounted there. Go to: Read More

The Confidential Report – September 2018


The DA’s loss of Nelson Mandela Bay and its near loss of Tshwane are perhaps a sign of the shift in political power since Cyril Ramaphosa took over as president. Without the political incompetence of Zuma to work off, the DA appears to have descended into in-fighting and has clearly lost some support. The ANC, on the other hand, appears to have benefited from Ramaphosa’s on-going reform of key government institutions – such as the National Prosecuting Authority and with the new Integrated Resource Plan (IRP) which eliminates nuclear power and moves strongly in the direction of renewable energy sources. The EFF is doing its best to be king-maker in the hotly contested administrations like Tshwane. The weakening of DA support will be a major factor in the 2019 elections.

Steady and essential clean-up of state owned enterprises (SOE) by Pravin Gordhan, with the backing of the president is vital to the recovery of the South African economy. The recent settlement with the public enterprises director general, Richard Seleke, is a good example. Seleke was implicated in various Gupta-linked e-mails and came to some negotiated agreement with the presidency to step down. The nature of the agreement is not known, but it is clear that the process of getting rid of captured senior officials at the SOEs continues. Gordhan has come in for criticism from the EFF for being too autocratic and engaging in a “reign of terror” – but perhaps that is exactly what was needed. South Africa cannot afford to delay in this clean up. Seleke also faces criminal charges from OUTA for his involvement in state capture. Read More

The Confidential Report – August 2018


President Ramaphosa has been steadily consolidating his power within the ANC and this bodes well for the country. His recent successes in the provincial elective conferences in Natal and Gauteng have seen his supporters elected to key positions in those provinces and a consequent loss of power for the Zuma camp. In Natal, the positions of deputy chairman and secretary are now occupied by Ramaphosa supporters. At the same time, in Gauteng, the position of deputy chairman was won by Lesufi – a Ramaphosa supporter. These changes will help to ensure some unity within the ruling party which has been deeply divided. That will bolster its position in the 2019 elections. Ramaphosa will only be able to address the more serious structural anomalies in the SA economy once he has a sufficiently strong grip on power. Read More

The Confidential Report – July 2018


Over the Zuma years there were any number of plans to develop the economy, the latest iteration of which was the National Development Plan, produced in 2012 with a vision for 2030. None of these plans have been effectively implemented. In fact, the economy is probably in a worse position now than it was 10 years ago from a structural point of view. But now we have the Ramaphosa era and he has begun well by mostly saying the right things and doing the right things – like changing the boards of the worst of the state owned enterprises (SOE). He wants to bring in $100bn in foreign direct investment (FDI) over the next 5 years – and he travelled to the G7 conference as part of this effort. There, he was persuading skeptical investors that policy certainty is going to happen in South Africa – especially in the mining industry and with land reform. He was trying to convince them that he is putting South Africa back onto a rational economic path. Of course, he had to be balanced with the fact that he faces an election in 2019 where populist ideas are likely to be important. So there is a limit to what he can do before that election and he is orchestrating a delicate balancing act between necessary and rational economics and the expediency of South Africa’s version of populism. Read More

The Confidential Report – June 2018


President Ramaphosa has been fortunate that his two main opposition parties for the 2019 election have been busy shooting themselves in the political foot. The DA’s extraordinary handling of Patricia De Lille now threatens to lose them their anchor support among the coloured people of the Cape Province. At the same time, Ramaphosa’s shrewd move to annex the EFF’s primary populist appeal in the area of land expropriation has forced that party to the extreme left where it has become blatantly and overtly racist in its message and at the same time made absurd suggestions about all land in South Africa reverting to the government on some basis. In the meantime, under Ramaphosa’s leadership, the ANC has been looking more and more like the balanced party of reason and common sense. An increased majority in 2019 will entrench Ramaphosa for the next ten years. Read More