Business confidence stays on upward trend

LOCAL financial market investor confidence jumped and business confidence rose on a continuing rebound in sentiment after the global slowdown and last year's recession, surveys showed yesterday.

LOCAL financial market investor confidence jumped and business confidence rose on a continuing rebound in sentiment after the global slowdown and last year's recession, surveys showed yesterday.

The SA Chamber of Commerce and Industry (SACCI) said its business confidence index (BCI) rose to 84,2 points in April from 83,2 in March.

SACCI said most domestic indicators had advanced beyond their lower turning points but low levels of household consumption were a key economic constraint.

Consumer spending has continued to decline due to high debt levels and about a million jobs lost since the start of 2009.

In an effort to boost local demand, the central bank has cut interest rates by a cumulative 550 basis points since December 2008.

A separate survey showed investor sentiment was at its highest since the second quarter of 2007, just before the US sub-prime crisis hit.

The Maxim-ETM Investor Confidence Index (ICI) jumped to a 2-1/2-year high of 105,9 points in the first quarter from a revised 94,4 in the previous three months, and 64,7 a year before when sentiment was still weak after the global financial turmoil.

"The latest ICI reading is indicative of the major turnaround in confidence brought about by global monetary stimulus and bailouts," market analysts ETM said.

Africa's biggest economy pulled out of its first recession in 17 years in the third quarter of last year after the global slump hit factories and exports. The central bank slashed its repo rate to 6,5percent to try to boost growth.

ETM said the bulk of the confidence was driven by offshore investor sentiment, evident in large capital inflows into local stocks and bonds as international liquidity improved.

However, local investors were still wary, preferring to shift from cash into bonds rather than into equities. - Reuters

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