Captains of industry doubtful of new finance minister
Captains of industry say David van Rooyen will have a lot of ground to make up to restore investor confidence.
JOHANNESBURG - Captains of industry say the new Finance Minister David van Rooyen will have a lot of ground to make up to restore investor confidence both in South Africa and abroad.
President Jacob Zuma made the surprise announcement last night to fire Nhlanhla Nene.
The decision sent shockwaves through the markets and devalued the rand.
Zuma has also come under fire in a number of quarters for failing to explain the move.
The Economist's editor Jonathan Rosenthal said, "There are two key economic institutions; the Reserve Bank and Treasury and up until now they have both been incredibly well managed and we've had great finance ministers."
Alexander Forbes' Edward Kieswetter says van Rooyen must now give investors an indication that they can trust his department.
"To give us some level of confidence that the overall policy direction will not be compromised because we can't afford it."
Intrepid Capital's Brigid Taylor says the move will have bad consequences on the bonds market.
"The reality we are seeing if we look at the reaction from the rand and the markets means that foreign investors are disinvesting quickly."
WATCH: Despite torching his house Khutsong wishes van Rooyen well.
Ratings agency Fitch has joined the growing criticism of the decision to fire Nene.
It says the move has raised more negative than positive questions for the country.
Fitch expressed concern that the expenditure ceilings may be raised, saying it was closely watching government.
Last Friday, Fitch joined Standard & Poor's which had already downgraded its rating to BBB-minus.
Standard & Poor's revised the outlook on six financial institutions namely FirstRand Bank, Nedbank, Standard Bank, Investec and Capitec.
The agency also lowered its long-term South African National Scale ratings on a number of banks.
LISTEN: Black Like Me founderHerman Mashaba on Nene's sacking.
Despite a rough start this morning, the AllShare rose around 0.23 percent, but there was a substantial fall in banking and financial counters.
On a positive note, the gold index led the gains, surging 4.26 percent.
The Banking Association South Africa (Basa) said the removal of Nene is concerning in the light of Fitch's downgrading its rating of the country to BBB-minus.
Managing director Cas Coovadia said the rating agencies cited the performance of treasury as positive, particularly efforts to curb spending.
"We have a budget deficit that is beginning to be worrying and we need to ensure that the expenditure is controlled and disciplined."
Coovadia added that Nene has been replaced by someone who is not known by the markets or any other business sector and that this is not good for international ratings.