This is a win for Cyril Ramaphosa, but given the make-up of the new NEC, this is not necessarily a loss for the Zuma faction within the ANC.
Markets got this one wrong – and were pricing in a Cyril slate victory, rather than a “hung” NEC. Hence, we expect the rand and the domestic-facing stocks to weaken tomorrow after their recent rally. Some of the euphoria will be repriced out of the market and it will retrace some of its steps as the reality sinks in.
If people were looking for big changes from this election, which is what markets were hoping for, they will be disappointed. With no clear win for either the Nkosazana Dlamini-Zuma or Cyril Ramaphosa slates, I expect to that the policy paralysis that we have seen will continue until one side “defeats” the other, even post the 2019 elections.
This elective conference was a choice to maintain the status quo of the entrenched elite within government, or replace it – so for now it looks like business as usual for government, which will not be perceived by investors, business or the rating agencies positively.
Given the free tertiary education pronouncements by President Zuma over the weekend, coupled with the results of the elective conference, the last standing rating agency will no doubt downgrade our country rating, and the economic challenges we face will continue.