Late last month, South Africa’s increasingly unpopular president, Jacob Zuma, unceremoniously sacked his well-regarded Finance Minister, Pravin Gordhan, and other dissident cabinet officials in a transparent power grab – replacing them with long-time loyalists.
Gordhan and Zuma had clashed repeatedly over the latter’s links to the politically-influential Gupta family and the management of state-owned enterprises.
Gordhan’s ouster not only leaves the Treasury without a proven hand at the tiller, it removes one of the government’s strongest proponents of transparency.
Predictably, the news triggered a 4% plunge in the value of the rand versus the dollar. And has already resulted in South Africa’s credit rating being downgraded.
So, while the headlines are dour for the moment, we remain bullish on South African stocks over the long-term.
The Johannesburg Stock Exchange (JSE) has seen it all over the past thirty years.