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South African CEOs’ optimism waning

20th July 2018

By: Nadine James

Features Managing Editor

     

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The Merchantec CEO Confidence Index (MCCI), compiled by corporate finance and research and business advisory company Merchantec Capital, recorded a 20.9% decrease in CEOs’ confidence between the first and second quarters of this year – a downward spike following the increase in optimism between the fourth quarter of last year and the first quarter of this year.

The MCCI collates views from over 1 000 CEOs of top South African companies to provide a leading indicator of how business leaders perceive local market conditions and the immediate economic future.

Merchantec noted that most CEOs had hoped that the election of President Cyril Ramaphosa would lead to a drastic Cabinet reshuffle, as well as radical economic policy changes that would potentially create an upturn in business confidence, but the anticipated effect had not materialised in the second quarter’s survey.

Forty-seven per cent of the CEOs rated Ramaphosa at five out of ten when asked to rate his first 100 days in office, indicating that the jury was still out on the assessment of the President’s performance, Merchantec said earlier this month.

“A few CEOs said it was unreasonable to expect a huge shift in the economy in such a short time and believe it will take far more than 100 days to turn the economy around, but the prevailing attitude is one of scepticism,” it added.

The MCCI noted that CEOs cited five major contributors to their change in disposition, namely the “Zuma Hangover”, uncertainties surrounding expropriation of land without compensation, the value-add tax increase, fuel price hikes and the rand:dollar exchange rate volatility.

Overall confidence is averaged by CEO responses from the basic resources, industrials, financials, information and communication technology, consumer goods and consumer services sectors.

CEOs across all six sectors believe economic conditions in South Africa are now significantly better than they were eight months ago.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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