Business advisory company Merchantec Capital’s CEO Confidence Index decreased by three percentage points in the first quarter of this year to a score of 45.4, which is below the neutral 50-point mark.

The largest contributor to this decrease in confidence is the planned level of investment across all sectors.

The business community's perspective, as captured in this quarter's CEO Confidence Index, called for political change and economic revitalisation, Merchantec Capital said.

An overwhelming 79.7% of CEOs indicated that they believe ruling political party the African National Congress’ (ANC's) support will fall below 50% in the upcoming elections. The anticipation of an ANC-led coalition has raised concerns about further entrenching antibusiness sentiment, which could worsen the outlook for South Africa.

"The responses highlighted a shared concern among CEOs over the current political direction and its impact on the business climate. A significant number of leaders expressed a desire for change, with some calling for economic reforms and a pivot away from ideologies seen as detrimental to market freedom. CEOs reflected a wide sentiment for change," the company said.

SECTOR RESULTS
Materials increased in confidence by six percentage points to 50.71 points, compared with 47.86 in the fourth quarter of 2023. The increase was primarily driven by industry growth expectations.

Further, Information Technology decreased in confidence to a score of 53.54 points, reflecting a 26-percentage point decrease from the score in the fourth quarter of 2023 of 72.50.

Consumer Staples decreased by 33.12 percentage points to 37.35. The decrease in overall confidence was primarily driven by economic conditions, said Merchantec Capital.

Consumer Discretionary, however, recorded an increase of 19.3 percentage points, which was driven predominantly by industry growth.

Financials increased by seven percentage points, moving to a score of 55.54 from 51.79 in the fourth quarter of 2023. The increase in overall confidence was primarily driven by an increase in economic conditions and company growth, the company said.

Further, Industrials recorded an increase in confidence of 25 percentage points.

This rise in confidence can be attributed to a 50 percentage points increase in confidence relating to industry growth expectations, despite the 36.1 percentage points decrease in planned levels of investment.

Utilities remained flat at 40.25.

Meanwhile, Communications Services recorded the largest increase in confidence at 44.7 percentage points to 85. The increase in overall confidence was driven by increases in contributing individual components of the index, 42.5% increase relating to industry growth expectations.

Confidence increases in the ability to secure debt or equity capital by 22.6 percentage points, and overall improving economic conditions by 22.3 percentage points, despite the 8.9 percentage points decrease in planned levels of investment, Merchantec Capital pointed out.

Further, Health Care increased to 55 points, or a meagre one percentage point increase.

Real Estate increased by 5.8 percentage points. Sentiment was primarily driven by a 10.9 percentage points increase in confidence relating to the ability to secure debt and equity capital and a 6.8 percentage points increase in confidence in economic conditions.

Energy saw a 12 percentage points increase, and this improvement in sentiment was primarily driven by a 34.1% increase in confidence in relation to economic conditions, said Merchantec Capital.