Markets are putting too much emphasis on President Jacob Zuma as the root of all problems in South Africa, Peter Attard Montalto, emerging markets economist at Nomura, said on Thursday.

Instead, in his view, Zuma needs to be seen as just one component of the so-called "tenderpreneur faction", whose ultimate success at the elective conference at the end of next year "is the embodiment of the status quo continuing beyond Zuma".

The Constitutional Court has ruled that Zuma and parliament violated the Constitution and that Zuma will now personally have to pay back a certain amount of money for improvements at Nkandla within 45 days of a determination by National Treasury (NT).

The case against Zuma, the speaker of parliament and others was brought by the DA and the EFF.

Montalto, however, is of the opinion that the court ruling about Zuma and parliament's duties does not change much within the ANC National Executive Committee (NEC).

"What happens next is unknown – there is no precedent on dealing with a declaratory order like this. Parliament’s rule book also says nothing on the specifics at present," said Montalto.

In his view, the market will continue to view "the triumph" of the Constitutional Court in the Nkandla saga as a positive for the rand and SA assets, but this view confuses a number of matters.

"The rand and SA assets will likely remain on the front-foot until the market realises that the Constitutional Court order that President Jacob Zuma and parliament violated the Constitution and their duties does not shift the needle decisively within the ANC NEC," explained Montalto.

In his view, the market currently views Zuma as being on the back-foot and, therefore, sees a higher chance of a so-called "Zumxit".

"As a result, the market also needs to recognise the deeper dismissive attitudes towards the Constitution held by some parts of the ANC. The impeachment process is unlikely to get anywhere as the ANC deals with issues internally. Such a motion is highly unlikely to garner a two-thirds majority," said Montalto.

"The court has clearly seen that it had no choice but to get involved in a very political area and in specifics. President Zuma’s control is political and patronage based and is independent and immune - to a large degree - to legal issues like this," said Montalto.

"The realms of legal and constitutional issues are very different from politics. The latter is the worry, not the former."

Montalto emphasised that markets need to recognise that some of the ANC’s views on the Constitution "have long been deeply disturbing". These would include statements by Zuma and the speaker of parliament Baleka Mbete that the ANC is “above” the Constitution,

"As such the issue goes much deeper: The Constitutional Court may triumph today, but what is the point if those from the 'ruling' party only pay lip service to the Constitutional Order?" asked Montalto.

"This is a much more market-negative underlying current and we have continually highlighted that 'Zumxit' or not, the status quo continuing here is equally worrying."

News24.com