SOUTH African financial markets, usually impervious to local politics, are plummeting after hearing about the resignation of Finance Minister Trevor Manuel and several cabinet minsters.
Just after noon, when the news hit the wires, the rand dropped 2,8% against the dollar, the bond market weakened sharply and the JSE all shareâ€™s index went into a free fall, losing 2,3% of its value in just half an hour.
Market experts were taken aback by the news and were scrambling to clarify the reports. If heâ€™s not going to stay, then he should manage the exit,â€ Jeremy Gardiner, a director at Investec Asset Management said.
â€œBut thereâ€™s a lot of depth in Treasury, Iâ€™ve no doubt thereâ€™s lots of guys who could do the job.â€
Thoraya Pandy, spokesperson for National Treasury said to Bloomberg that Manuel would â€œassist the new administrationâ€ and that he served â€œat the pleasure of the presidentâ€.
But Manuel is the worldâ€™s longest serving finance minister and he was due to present his mini budget next month. Manuel was not the only minister tendering his resignation today.
Ten ministers, including Public Enterprises Minister Alec Erwin and three deputy ministers, submitted their resignations, the presidency said in an e-mailed statement today. Deputy President Phumzile Mlambo-Ngcuka resigned in the morning.
George Glynos, head of Econometrix Treasury Management said he thought the whole thing was very unfortunate and very disappointing.
â€œThe timing couldnâ€™t be worse with this back drop of global risk aversion and the banking crisis. It shows a lack of foresight in the new National Executive Committeeâ€™s decision to oust President Thabo Mbeki. Iâ€™m not sure they thought this through properly.â€
Glynos said todayâ€™s events had raised the risk profile of SA and the negative reaction across all markets was justified.
â€œThis has put the rand in a depreciating mode and does not bode well for capital inflows. Why would you invest in a country as politically unstable as SA is at the moment?â€
The ANC said it would hold a press briefing this afternoon to discuss the resignations.BUSINESSDAY