Merchantec CEO Confidence Upswings by 13% in Q2 2024 Amid Economic and Political Optimism in South Africa

The Merchantec CEO Confidence Index recorded a 13% increase in CEO confidence, rising to a score of 51.4. This improvement was driven by a 24% increase in the Consumer Staples sector and the recent absence of loadshedding.

The Index has experienced notable fluctuations over the past few years. It started at 43.33 points in Q1 2019, showed modest gains, then dropped to 39.9 by the end of that year.

A strong recovery in 2021 saw the index peak at 58.4 in Q4. In 2022, it started high at 57.0, dipped to 47.9 in Q2, then recovered to 54.6 in Q3, ending at 52.6 in Q4.

In 2023, it started at 44.4, gradually climbed to 51.4 by year’s end, and continued this upward trend into 2024, starting at 45.4 in Q1. These changes indicate a pattern of cautious optimism among CEOs, influenced by varying market conditions and economic pressures.

Specific sectors saw varying changes in Q2 of 2024:

Materials increased by 6% to 50.71 points, driven by industry growth expectations.

Information Technology increased to a score of 59.17 points, reflecting an 11% increase.

Consumer Staples increased to 59.58 a 31% increase.

Consumer Discretionary decreased by 4%, mainly attributed to economic conditions.

Financials increased by 8%, moving to a score of 59.76 from 55.54 in Q1 of 2024.

Industrials increased by 13%, moving to a score of 57.98.

Communications Services remained flat at a score of 85 points.

Health Care increased by 10%, driven predominantly by the ability to secure debt.

Real Estate increased by 28%, driven by increased confidence relating to industry growth expectations.

Merchantec Capital’s latest CEO Confidence Index provides an insightful perspective on South Africa’s democratic function, with many CEOs maintaining a cautiously optimistic outlook, influenced by political stability and the absence of loadshedding.

The recent formation of the Government of National Unity (GNU) cabinet has sparked hopes for better governance, with CEOs noting significant operational benefits from recent political changes and uninterrupted power supply.

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.