Bosses show trust in SA economic fortunes

THE confidence of South African chief executives continues to improve in line with brightening economic prospects, corporate finance and research company Merchantec said yesterday.

THE confidence of South African chief executives continues to improve in line with brightening economic prospects, corporate finance and research company Merchantec said yesterday.

The Merchantec CEO Confidence Index rose by 2 points to 60,32 in the fourth quarter, showing that chief executive confidence in current economic conditions had remained consistently optimistic for two consecutive quarters.

"There is a direct correlation between CEOs' optimism and the improvement in the economy," said FoneWorx chief executive Mark Smith.

The latest survey indicates that chief executives' confidence showed its second quarterly gain from the 2009 second quarter low of 48,13.

There have been positive signs of recovery in the market and chief executives are picking up on these, as more than 60percent expect their companies to grow in the next six months.

"The large degree of optimism one would expect from the latest CEO Confidence Index can be attributed to benefits that will flow from the World Cup, which could grow the economy to a range of between 1,8percent and 2,5percent," Smith said.

The index further highlighted a 10percent jump in chief executives' sentiment towards their companies' ability to raise capital.

"As banks continue to relax credit lending criteria due to a slowing demand for credit, increased capital is available for quality companies," Craig Margolius of Merchantec said.

The financial sector is leading the charge for a second quarter in a row, followed by the technology sector, as interest rates are left unchanged and annualised GDP grew by 0,9percent in the third quarter.

There has been a shift in sentiment in the technology sector, as chief executives appear to be more confident in their ability to raise capital.

This may be as a result of technology companies focusing on annuity revenues and increasing cash on their balance sheets, said Margolius. - I-Net Bridge

X