South Africa's rand slipped and the country's stocks and bonds came under pressure on Thursday after projections showed the governing ANC was set to lose its parliamentary majority in this week's election.
At 11.40am, the rand traded at R18.6400 against the dollar, around 1% weaker than its previous close. The currency is down around 2% since the start of the year.
On the Johannesburg Stock Exchange, the blue-chip Top40 index was down nearly 2% compared to a 1.3% decline across wider emerging markets, while both local and international bonds also came under pressure.
The Council for Scientific and Industrial Research projected that the ANC would get 42% of the national vote, while broadcaster eNCA estimated the ANC would get around 45% of the vote.
So far, the election commission has only released results from just over 16% of polling stations. Those partial results put the ANC at 42.5% of the vote, the biggest opposition party Democratic Alliance at 25.7% and radical leftists the Economic Freedom Fighters at 8.5%.
If the final results were to resemble the early picture, the ANC would be forced to make a deal with one, or more, other parties to govern - a situation that could lead to unprecedented political volatility in the coming weeks or months.
Early results pointed to the ruling ANC securing a vote share closer to the low end of projections, "increasing the chances that it will need to rely on one of the larger opposition parties to form the next government," Jason Tuvey, the deputy chief emerging markets economist at Capital Economics, said in a research note.
That could introduce "potentially more radical policy outcomes," Tuvey added.
South Africa's government bonds also felt the pressure. Yields on the domestic 10-year benchmarkspiked as high as 10.743% - levels last seen in late April - before pulling back to 10.655%, data showed.
Among international dollar bonds, the longer-dated maturities slipped nearly 1 cent in early trading to hit four week lows before retracing some of the losses. By 11.45am, the 2052 bond traded at 86.852 cents, Tradeweb data showed.
The cost of insuring exposure to the country's debt rose. Five-year credit default swaps climbed by 3 basis points from Wednesday's close to 230 bps, the highest level in a month, according to data from S&P Global Market Intelligence.
REUTERS