20180201-法国巴黎银行-South_Africa__Mining_a_further_Ramaphosa_rally_9页_523kb

Summary of Document: South Africa: Mining a further Ramaphosa rally

Core Content

This document analyzes the potential impact of a leadership transition in South Africa on the country's financial assets and the mining sector. It highlights the political and economic context surrounding President Jacob Zuma's possible resignation and the role of Deputy President Cyril Ramaphosa in shaping the future of the mining industry. The focus is on how a successful transition could lead to policy reforms and economic recovery, particularly through the revitalization of the mining sector.

Main Views

• Leadership Transition: A leadership transition is underway, with President Zuma's removal from office being a key factor in improving investor confidence and financial asset performance. Mr. Ramaphosa's leadership of the African National Congress (ANC) and his commitment to reform have contributed to this optimism.

• Market Optimism: The current market optimism assumes that Zuma will leave office by the end of Q1 2018. If this does not happen, confidence may wane as the reform agenda is likely to take longer than expected.

• Mining Sector Importance: The mining sector is identified as a key area where Mr. Ramaphosa may focus to achieve "quick wins" that can stimulate growth, investment, and employment. The sector has been a major contributor to economic stagnation due to its declining performance.

• Policy Stalemate: The mining sector has been in a policy stalemate for over five years, with the Department of Mineral Resources (DMR) and its policies being a major point of contention. The revised mining charter and the Mineral and Petroleum Resources Development Amendment Bill have been at the center of this impasse.

• Potential for Growth: The Chamber of Mines has indicated that a more stable regulatory environment could unlock significant investment and job creation in the mining sector. This includes up to ZAR 267bn in additional investment (c.5.5% of GDP) and potentially 50,000 jobs over five to seven years.

• Employment and Multipliers: The mining sector has a large potential for spillover effects into other sectors, particularly manufacturing, through employment and activity multipliers.

• Risk of Ministerial Reshuffle: If Zuma resigns, Mr. Zwane, the Minerals Minister, is likely to be one of the first to be reshuffled. Additionally, the ongoing state capture investigation could lead to changes in the DMR, even without Zuma's resignation.

Key Information

• Zuma's Legal Troubles: Mr. Zuma's legal issues remain a central concern. His legal team is challenging corruption charges, and the terms of reference for the state capture inquiry are set to be gazetted.

• Investment Outlook: The mining sector is expected to see increased investment and employment if regulatory clarity is achieved. This is seen as a strategic move to revive economic growth and investment.

• Charts Included:

  • Chart 1: Highlights the "Ramaphosa rally" and the assumption that Zuma will leave office in Q1.
  • Chart 2: Shows the mining sector's contribution to GDP, indicating its declining role in the economy.
  • Chart 3: Depicts the capex replacement ratio for the mining sector, showing its underperformance.
  • Chart 4: Illustrates the potential upside for mining investment if policy stability is achieved.

Conclusion

The document emphasizes the importance of a swift leadership transition for South Africa's economic recovery. It suggests that the mining sector, with its potential for significant investment and employment growth, is likely to be a focal point for Mr. Ramaphosa's reform agenda. However, the success of these initiatives depends on resolving the ongoing policy and legal challenges, particularly those involving the Department of Mineral Resources and the state capture inquiry.

Regulatory and Legal Notices

• The document is a marketing communication and not independent research, intended for Relevant Persons.
• It may contain research content for firms that have signed up for BNPP Global Markets Research packages or are out of scope of MiFID II unbundling rules.
• Conflicts of interest are acknowledged, and BNPP may engage in transactions inconsistent with the views expressed.
• The document is not a prospectus and does not constitute an offer to sell or purchase any financial instruments.
• Important disclosures are provided for U.S. and UK investors, including those related to options, ETFs, and convertible securities.
• The document is subject to confidentiality, and recipients are required to obtain prior written consent before reproducing or distributing its content.

Summary of Key Points

• Leadership Transition: Zuma's exit is crucial for maintaining market confidence.
• Mining Sector: A potential focus for Ramaphosa's reform agenda due to its economic significance.
• Policy Reforms: Needed to unlock investment and employment in the mining sector.
• Legal and Political Risks: Remain high, particularly with Zuma's legal issues and the state capture inquiry.
• Investment Potential: The sector could see up to ZAR 267bn in additional investment and 50,000 jobs if policy clarity is achieved.