Maroc - dailynews.co.za - Business - 04/Jul 14:12

Sentiment among CEOs in Q2 swings upwards buoyed by economic and political optimism

Sentiment among CEOs of leading companies in South Africa has remained optimistic about economic and market conditions on the back of stable supply of electricity and political stability since the formation of the Government of National Unity (GNU).The Merchantec CEO Confidence Index released yesterday recorded a 13% increase in CEO confidence, rising to a score of 51.4 points in the second quarter.This improvement was driven by a 24% increase in the Consumer Staples sector and the recent absence of load shedding after Eskom suspended rotational power cuts throughout the second quarter.The Index is a quarterly copyright report which collates the views of CEOs of listed, large private and multinational companies in South Africa since 2009.It is compiled by Merchantec Capital, a mergers and acquisitions specialist and corporate governance advisory company.CEOs are key players in the market and economy and are instrumental in influencing the future of Corporate SA.The Index has experienced notable fluctuations over the past few years, starting at 43.33 points in the first quarter of 2019 before showing modest gains and then dropping to 39.9 points by the end of that year.A strong recovery in 2021 saw the index peak at 58.4 points in the fourth quarter.In 2022, it started high at 57.0 points, dipped to 47.9 points in the second quarter, then recovered to 54.6 points and then ended at 52.6 points in the fourth quarter.In 2023, it started at 44.4 points, gradually climbed to 51.4 points by year's end, and continued this upward trend into 2024, starting at 45.4 points in the first quarter.Merchantec Capital said these changes indicate a pattern of cautious optimism among CEOs, influenced by varying market conditions and economic pressures.“The recent formation of the GNU Cabinet has sparked hopes for better governance, with CEOs noting significant operational benefits from recent political changes and uninterrupted power supply,” Merchantec Capital said.“However, concerns persist about the coalition's effectiveness and adherence to constitutional mandates, with some CEOs skeptical about the potential challenges and economic impacts of race-based policies.“Low voter turnout and internal political dynamics are also seen as potential threats to the stability and effectiveness of the GNU.”The Index is unique in that it accounts for CEO Confidence according to sectors – making a good connection to Company prospects in the various sectors.It showed that confidence of CEOs in the materials sector increased by 6% to 50.71 points, driven by industry growth expectations while that of those in Information Technology ramped up to a score of 59.17 points, reflecting an 11% increase.Confidence of CEOs in the Consumer Staples rose by 31% to 59.58 points while that of CEOs in the financials increased by 8%, moving to a score of 59.76 points from 55.54 in the first quarter.However, sentiment of CEOs in the Consumer Discretionary sector fell by 4%, mainly attributed to economic conditions.BUSINESS REPORT