Sygnia, the asset manager cofounded by Magda Wierzycka, said the ANC was voted out of power for mismanaging the economy among other things, warning that much would depend on what political choices and compromises are made in the weeks ahead.
“The final election results reflected years of neglect and mismanagement of the economy, as well as a lack of strategic planning, with ANC support falling to 40%,” said Sygnia on Wednesday. “The options facing the ANC at the time of writing are to form coalitions or to govern as a minority government.”
Noting that Eskom had put the “pedal to the metal” to keep the lights on before the election, the specialist financial services group said while investors were alarmed by the expectation of an unknown coalition government, SA remained a destination of choice for tourists and “cannot be completely ignored on the global stage”.
“Whatever happens, the demands on government have not changed. Foreign investment, a focus on fixing dysfunctional municipalities, and fiscal prudence remain economic priorities,” said the company.
The ANC suffered its most humiliating defeat at the polls in 30 years as its share of the vote plunged almost 17 percentage points, from 57% in 2019 to 40% in 2024.
Sygnia is the second-largest provider of exchange traded funds (ETFs) in SA and the largest provider of international ETFs on the JSE.
On Wednesday, it reported that the boom in artificial intelligence-driven investment, alongside a modest recovery in commodity prices which buoyed equity markets and growth of assets under its management and administration from a mix of institutional and retail clients, resulted in strong earnings growth in the half year to March.
Basic and headline earnings per share rose 9.7% to 100.7c in the six months under review from 91.8c, in the prior matching period.
The group revenue for the period rose 8.7% to R444.2m while total expenses rose 8% to R253.8m from R235m. After-tax profit rose 10.2% to R152.5m.
Highlighting that the continuing financial success of the group depended largely on the growth of assets under management and administration from a mix of institutional and retail clients, Sygnia said, “The results are also cyclical, reflecting the performance of the markets and currency.”
Assets under management and administration grew 7.3% to R341.3bn while institutional assets under management increased from R253.3bn in March last year to R269.8bn.
Despite SA government bonds being considered low-risk investments, backed by the full faith and credit of the government, a concoction of weak growth, persistent fiscal concerns and a possible rating downgrade have plagued the local bond markets.
The company cautioned that the decline in foreign investors owning government bonds, which has led to talk of prescribed asset requirements and stricter offshore investment limits for retirement funds via Regulation 28 of the Pension Funds Act, would not be solved by stricter regulations.
“As it stands, foreign investors own only 25% of all government-issued bonds, down from 43% in 2018, the asset manager said. “In reality, retirement funds already own 25% of government debt, and it is difficult to see how a higher prescription would solve long-term solvency issues.
“Similarly, applying more stringent offshore investment limits would deprive savers of the benefits of diversification and force them to invest in an ever-shrinking JSE, where the top 10 stocks already represent 45% of its market capitalisation.”
The company said that a “wealth tax” would probably lead to even more tax emigration by those who could afford it.
The Cape Town-headquartered fund manager’s board declared an interim dividend per share of 90c for the six months to end-March.
Sygnia’s share price was up 0.43% at R20.89 on Wednesday afternoon.
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