The Merchantec CEO Confidence Index strengthened slightly in the fourth quarter of 2013, increasing by 3.8% to an overall score of 55.3 points, representing the first consecutive quarterly increase in confidence since 2010.

The study showed that the majority of CEOs surveyed (78%) did not expect the cancellation by the South African government of its bilateral investment treaties (BITs) with the European Union (EU) to negatively affect their companies in 2014.

South Africa was currently terminating its old-generation BITs with other countries, including EU countries, following a review of the system by the Department of Trade and Industry in 2007.

“While some CEOs expressed concerns over the negative economic impact of reduced investor sentiment from South Africa’s largest trade and investment partner, the majority foresaw no direct negative effect on their businesses,” Merchantec stated.

Meanwhile, CEOs participating in the survey were particularly positive in relation to the growth expectations for their companies, with 49% expecting ‘moderately higher’ growth, compared with 47% in the third quarter of 2013, while 10% expected ‘substantially higher’ growth in the coming months.

Company heads, once again, highlighted concerns over labour unrest and the costs thereof, high levels of corruption and unrealistic broad-based black economic-empowerment legislation, as factors that may be tarnishing investor confidence and hindering foreign direct investment into the country.

Further, the technology sector continued its rebound in confidence, rising 11.1% to a score of 56.9 points.

This rise in sentiment was primarily driven by a 22.7% increase in confidence relating to economic conditions and a 16.2% increase in confidence relating to CEOs' ability to secure debt and equity capital for business activities.

Confidence in the industrial and financial sectors also rose, experiencing increases of 6.2% and 3.9% to scores of 56.5 and 59 respectively.

These increases were somewhat offset by a 6.3% year-on-year decrease in the consumer goods sector and a 2.5% drop in the basic materials sector, while the consumer services sector remained relatively flat with a 1.4% decrease to a score of 53.

The Merchantec CEO index collates views from over 1 000 CEOs of top South African companies, providing an indicator into how business leaders perceive local market conditions and the economy going forward.