Business chief executive confidence in South Africa reached levels last seen in 2012 in the first quarter of the year, led by a surge in sentiment among financial services’ sector head honchos.
The Merchantec CEO confidence index surged 56.18 percent in the quarter to 60 points from 38.4 points in the last quarter of last year. This was also the first time the index moved above the neutral score line of 50 points since the first quarter of last year.
Merchantec said improved economic conditions and industry growth were the biggest contributors to the massive confidence leap among chief executives.
“Most chief executives have indicated that the election of the new president has had a positive boost on their business. However, some chief executives are still sceptical over
economic growth prospects following policy changes such as the (VAT) increase as well as the rumblings of land expropriation without compensation,” the research firm said.
“One prominent chief executive said that despite the ‘land issue’, South Africa’s political outlook and business optimism has significantly improved since the December election of Cyril Ramaphosa as ANC president.”
The quarterly index collates responses from more than 1 000 chief executives, primarily from the listed environment. The financial sector recorded the largest increase in confidence. Sentiment in the sector soared 65 percent to 69 points, on the back of a surge of 105.3 percent increase in confidence relating to economic conditions and an increase of 71.1 percent in industry growth expectations.
Sentiment in the industrials sector surged 51.4 percent moving to a score of 59.27 points, while confidence in the consumer services increased by 40.7 percent to 60.88 points.
Confidence in the technology sector increased from 39.11 points to 49.77 points, while consumer goods jumped from 46.52 points to 61.11 points.
However, the basic material sector saw a marginal decline in confidence, decreasing from 47.14 points to 45.83 points. Outgoing FirstRand chief executive Johan Burger last month became the latest captain of industry to pin his businesses growth hopes on the elevation of Ramaphosa to the country’s head of state.
Nedbank chief executive Mike Brown was the first banking leader to applaud the elevation of Ramaphosa to head of state, saying the move was a lift in confidence levels across corporate and retail customers, which was favourable for the banking sector. The sentiment sensitive banking and financial services sector has enjoyed a stellar start to the year, riding the wave of the positive sentiment.