How Trump’s Victory Impacts South Africa’s Economy
Ladies and gentlemen, step up for the greatest show on Earth: the USA elections! With Trump back in the White House, South Africans are left wondering how a political circus halfway around the world will affect our beloved country. Spoiler alert: it will be a bit of a rollercoaster ride!
The Trade Trapeze
First up, we have the Trade Trapeze. Picture this: the USA, the world’s largest consumer-driven economy, is like that one friend who buys everything in bulk at Makro at cut prices. South Africa, on the other hand, is the savvy township entrepreneur trying to sell their goods to anyone and everyone. Trump’s trade policies can either open the floodgates for our exports or slam them shut faster than you can say “AGOA”. All bets are off on this one as Trump focuses on making America Great (yet again) from the inside out with a strong focus on USA manufacturing at the cost of imports. The GNU will have to walk the tightrope between appeasing the USA and pandering to China and Russia very carefully as SA will suffer the economic consequences of a politically driven cancellation of AGOA, our lifeline to US markets.
The Currency Carousel
Next, we hop on the Currency Carousel. The Rand and the Dollar are like two kids on a seesaw – when one goes up, the other comes down. Depending on his policies, Trump’s economic decisions can send the Rand on a wild ride. A strong Dollar often means a weaker Rand, making imports more expensive and inflation, and higher interest rates, could be back at our door in a flash. This would, I fear, be the straw that breaks the Kwagga’s back!!
The Investment Juggle
Finally, we have the Investment Juggle. International investors are like jugglers, constantly tossing their money around. Trump’s victory might boost investor confidence, leading to more capital flowing into South Africa. But if his policies are unpredictable, we might see investors pulling back faster than a cat avoiding a bath. As investors we look globally for returns and, dare I say, it looks like we might need to use our common sense and allocate the maximum that we can offshore to the detriment of our local markets. Despite the cheap prices of SA equity, it takes a strong stomach to over-allocate to the SA market under these conditions.
Curtain Call
In the end, Trump’s victory in the US elections is like a grand circus act with plenty of twists and turns still to come. For South Africa, it’s all about staying resilient and adaptable. Whether it’s navigating trade policies, currency fluctuations, or investment trends, we’ve got to keep our eyes on the prize and our sense of humour intact.
So, grab your popcorn and enjoy the show – because when it comes to the USA elections, you never know what’s coming next! So, let’s make this a Fun Fair where we all step up and win a prize rather than a circus run by a bunch of clowns!!
Mark Levy
Investment Specialist
