Americans are gearing up to vote in the upcoming United State elections set to take place on November 5. As it stands with less than two weeks to go, the race to the Presidential seat has become tighter with former President Donald Trump edging over his Democratic counterpart, and current US Vice President, Kamala Harris.
The Independent reports that in the seven swing states, neither Trump nor Kamala are more than a few points ahead while in Texas and Florida, Trump is in the lead with under 10 points.
So, what does this mean for South Africa and why should you as a South African care about US elections?
Well for one, our currency is sensitive to US economic policies, market movements and US sentiment towards emerging markets.
"Aggressive trade actions from the US may trigger a depreciation of the Rand, complicating the import landscape while driving up import prices as a result. Conversely, anticipated investment and trade could strengthen the currency, contingent on the U.S. market’s response to Trump’s or Kamala’s policies," explained Aluma Capital economist, Frederick Mitchell.
He pointed out that a potential Trump or Harris victory brings both opportunities and challenges for South Africa.
"Stronger economic growth and stable trade policies could yield significant benefits, but protectionist measures and geopolitical tensions present substantial risks. To navigate these complexities, South Africa should capitalise on African Growth and Opportunity Act (AGOA) opportunities while preparing for possible uncertainties," he said.
Mitchell explained that market volatility is likely inevitable, "particularly when political risks influence various asset classes, resulting in significant fluctuations in listed stocks, bonds, and currency values."
He added that the event of either a Trump or Harris administration, returns on private equity and alternative investments may be less volatile and more stable due to the nature of these assets, which often respond differently to political risk compared to publicly traded securities.
"As global markets continue to evolve, adaptability will be essential for fostering a bright economic future, irrespective of the political climate in the United States. Effectively managing these dynamics will help ensure sustained growth and stability for the South African economy," Mitchell said.
IOL