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Business Confidence for September has recovered from August’s lowest levels in 34 years which was 89.1 index points to 92.4 index points; this is According to the South African Chamber of Commerce and Industry’s business confidence index. The contributors to increased levels were merchandise exports and a strong rand. Richard Downing, Economist at the South African Chamber of Commerce and Industry joins CNBC Africa for more.

SA Business Confidence recovers in September

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Business confidence in South Africa has hit a 20 year low. The RMB/BER Business Confidence Index indicates a drop to 21 in the third quarter.

SA business confidence hits a 20 year low

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The fourth quarter results for the RMB/BER Business Confidence Index has been released showing the lowest numbers in 2018. This after the previous two quarter index reflected almost average business confidence picking at just over 40 regarded as neutral. The latest index shows the Business Confidence to be standing at a low 31. Ettienne Le Roux, Chief Economist at RMB joins CNBC Africa for more.

Business confidence falls in fourth quarter

(Reuters) &#8211; A South African business confidence index fell in the second quarter by 6 points, a survey showed on Wednesday, a sign the economy was struggling amid hopes that President Cyril Ramaphosa would help revitalise the country and attract investment.
The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research fell to 39 points in the second quarter from 45 points in the first quarter, falling further below the 50-mark separating the net positive and negative territories.
However, RMB’s chief economist, Ettienne Le Roux, said that the trend in business confidence remains upwards, even if only tentatively so, despite the second-quarter decline.
Le Roux said that it was important that the political and policy factors currently weighing down on confidence were resolved.
First-quarter business confidence jumped 11 points, mainly because of the change in the country’s political leadership in February, when Ramaphosa was elected, RMB said in a statement.
But South Africa suffered its worst quarterly contraction in nine years in the first quarter. Gross domestic product shrank 2.2 percent, led by a slowdown in agriculture and mining, after expanding 3.1 percent in the final quarter of last year, Statistics South Africa said.
Earlier this month, The South African Chamber of Commerce and Industry reported its monthly business confidence index fell to 94 in May from 96 in April as trade declined and consumer inflation rose after an increase in Value Added Tax [nJ8N1OS02P].
Reporting By Justin George Varghese and Arathy S Nair in Bengaluru, editing by Larry King

SA’s business confidence declines to 39 points in Q2, here’s what you need to know

South Africa’s business confidence index fell to its lowest in more than three decades in August as merchandise import and export volumes fell, a survey showed on Wednesday.
The business group said South Africa’s economic performance was sub-optimal despite an positive global outlook, and improved business confidence was needed to revitalise domestic growth.
The South African Chamber of Commerce and Industry’s (SACCI) monthly business confidence index (BCI) fell to 89.6 in August, the lowest level since mid-1980s, from 95.3 in July.
“Lower merchandise import and export volumes mainly caused the sharp monthly decline of the BCI in August 2017. Lower consumer inflation and new vehicle sales made only moderate positive monthly contributions,” SACCI said in a statement.
Africa’s most industrialised economy emerged from recession in June, helped by recovery in agriculture after a drought last year, but political scandals and policy uncertainty still dampen investor confidence.
Since South Africa emerged from the 2009 recession, growth has fallen short of the government’s target of 5 percent, the level economists say is needed to curb unemployment.
The country is beset by low growth, the fallout from credit downgrades, corruption scandals and in-fighting in the ruling African National Congress party which is due to hold elections in December to replace President Jacob Zuma as its leader. Zuma tenure as South Africa’s president ends in 2019.
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Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia
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South Africa’s business confidence at lowest in over 30 years

South Africa&#8217;s business confidence climbed to its highest level in five months in July helped by a firmer currency, falling inflation and an increase in vehicle sales, a survey showed on Tuesday.
The South African Chamber of Commerce and Industry&#8217;s (SACCI) monthly business confidence index (BCI) accelerated to 95.3 in July from 94.9 in June. It was the highest level since February 2017.
The business group said the main contributors to the improvement were made by higher vehicle sales, more building plans passed, lower inflation and higher share prices.
SACCI also said a firmer currency, on a trade weighted basis, had also helped smooth some of the negative sentiment that followed the sudden firing of Pravin Gordhan as finance minister in March and subsequent credit downgrades to &#8220;junk&#8221;.
&#8220;Locally there are indications that growth in the second quarter may be slightly positive. The inflation rate is also slowing down,&#8221; SACCI economists said in a statement.
Africa&#8217;s most industrialised economy slipped into recession in March, while political scandals and policy uncertainty, including a no-confidence vote against President Jacob Zuma later on Tuesday, have dampened investment.
SACCI warned that factional battles in the governing African National Congress could hamper a recovery.
Moody&#8217;s, the last of the top three ratings firms to still rate the country investment grade, is due to announce a rating review on Friday.
Reporting by Mfuneko Toyana; Editing by James Macharia

South Africa’s business confidence climbs to 5-month high in July

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According to the latest RMB/BER Business Confidence Index released last week, business confidence levels in South Africa are at the lowest since the 2009 recession. Now more than ever, SMEs have a vital role to play in the South African economy.

SA business confidence falls to worst level since 2009 recession

South African business confidence fell deeper into negative territory in the second quarter, to a level not seen since the 2009 recession, a survey showed on Wednesday, as persistently weak business activity and concerns over politics weighed.
The Rand Merchant Bank (RMB) business confidence index compiled by the Bureau for Economic Research fell to 29 points in the second quarter from 40 points in the first quarter, remaining firmly below the 50-mark separating the net positive and negative territories.
South Africa sank into recession for the first time in eight years in the first quarter, hit by weakness in consumer sectors such as wholesale, retail and accommodation.
The latest survey results suggest seven out of every 10 respondents are downbeat about prevailing business conditions, suggesting year-on-year economic growth slowed even further in the second quarter, RMB said.
&#8220;In fact, given the severe strain many industry respondents (and consumers for that matter) are under, a contraction in GDP for the year as a whole is not inconceivable,&#8221; RMB said in a statement.
Unlike the 2009 recession, when authorities eased fiscal policy and aggressively cut rates to counter the decline in economic growth, RMB sees &#8220;no easy options&#8221; this time to restart economic growth.
&#8220;Given sovereign credit rating pressures, providing fiscal stimulus is not an option. And while it is not impossible for the Reserve Bank to lower rates, a deep-cutting cycle is most unlikely given the rand&#8217;s vulnerability to various global as well as domestic risks,&#8221; RMB added.
Ratings agency Moody&#8217;s downgraded South Africa&#8217;s credit rating but kept it at investment grade with a negative outlook, citing a recent abrupt cabinet reshuffle and reduced growth prospects for an economy mired in recession.
South Africa relies heavily on foreign money to cover its large budget and current account deficits but could struggle to attract investment if political tensions linger on and economic growth does not return.
(Reporting by Rahul B in Bengaluru; Editing by Hugh Lawson)
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South Africa’s Q2 business confidence plunges to 2009 lows

South African President, Jacob Zuma, has decided to remove the Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas, from their posts. Minister Malusi Gigaba, who led the home affairs ministry has been appointed as the new Finance Minister with Sifiso Buthelezi, a member of parliament, as his deputy. While the two officials are not strangers to public office, they have not served at the National Treasury before.
The new Minister of Finance becomes the fourth official to lead Treasury in just under two years. In that period, South Africa has seen three Finance Ministers come and go: the respected Nhlanhla Nene got fired and replaced by Des van Rooyen who was, in turn, hastily removed from office to pave way for Pravin Gordhan’s return to Treasury after his earlier tenure. These changes to the economic management cluster of the South African government are the most rapid and unprecedented since the dawn of democracy.
Given such instability at the helm of the National Treasury, financial markets have already responded negatively with the rand selling off sharply. Market participants were aware of the risk that Pravin Gordhan would be removed as Minister of Finance. Even though bond markets became more volatile recently, expressing a heightened sensitivity to developments in the political sphere, we do not see evidence suggesting this risk was fully priced in (see figure 1).
Our view, therefore, is that markets are very likely to react adversely now that the risk has materialised and investors should expect significant volatility in the midst of uncertainty, especially when one considers the factors highlighted below.
Figure 1: Evolution of SA benchmark 10-year government bond yield 
<div id="attachment_116264" style="width: 746px" class="wp-caption alignnone"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-116264" class="wp-image-116264 size-full" src="http://cnbc.africa/wp-content/uploads/2017/03/Investment-Solutions-graph-31-March-2017.jpg" alt="" width="736" height="394" />Source: Thomson/Reuters Datastream and Investment Solutions</div>
Capital flows
Business confidence has been depressed domestically and foreign investors have begun to sell South African assets. The cumulative outflow in equities in 2016 was around US$9 billion. Although we saw net inflows into South African bonds, on aggregate, there have been portfolio outflows from South Africa. As it is, the Institute of International Finance, a Washington-based global association of financial institutions, has warned that should protectionist policies get implemented in the US by the Trump administration, capital flows (both foreign direct investment and portfolio flows) would face a turbulent time &#8211; with countries such as Mexico and South Africa hardest hit.
Need to reaffirm South Africa’s policy position 
Investor confidence has been substantially dented by the rapid changes that have taken place at National Treasury. Given such volatility and uncertainty, the new authorities need to communicate that South African institutions remain intact. The independence of the South African Reserve Bank and the judiciary needs to be affirmed. They will also need to demonstrate that fiscal policy will not take a materially different direction from what has been established since 1994. The biggest fear held by investors is whether more populist fiscal policies will be embraced or not.
Credit ratings 
Rating agencies have warned repeatedly of the likelihood of downgrading South Africa to non-investment grade should the volatility of the political environment deepen. Although much of the decision will be heavily dependent on what the new Minister of Finance says about fiscal policy and its trajectory, markets are likely to fully price South African debt as junk. After much positive ground gained last year under the leadership of Pravin Gordhan &#8211; especially after the relentless effort by business, labour and government, which made such a positive contribution &#8211; that work could easily be wiped out should the new authorities exhibit a major deviation from the policy construct put forward at the February 2017/18 National Budget.
Lower returns 
Data from Credit Suisse Global Investment Returns Yearbook shows that South Africa has experienced the best after-inflation return in the world of 7.2% for 116 years from 1900-2016. This was better than the 6.8% achieved by Australia, 6.4% by the US, 6.2% by New Zealand and 5.9% by Sweden. Indeed, such a stellar performance is unlikely to be sustained going forward. Given the possible challenges around global capital flows &#8211; especially foreign direct investment, which has some positive correlation to equity market returns, combined with the fact that valuations at the Johannesburg Stock Exchange are still above long-term averages &#8211; future returns are likely to remain much lower than the lofty gains seen in the past seven years.
Need for diversification 
It’s in times like these that investors need to hold on to a diversified and long-term investment strategy. Even as a political storm is once again battering South Africa, history has shown that, in the long-term, markets have the ability to return to fundamentals even when short-term noise, especially from the political sphere, creates much angst.

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business confidence

SA Business Confidence recovers in September

SA business confidence hits a 20 year low

Business confidence falls in fourth quarter

SA’s business confidence declines to 39 points in Q2, here’s what you need to know

South Africa’s business confidence at lowest in over 30 years

South Africa’s business confidence climbs to 5-month high in July

SA business confidence falls to worst level since 2009 recession

South Africa’s Q2 business confidence plunges to 2009 lows

A new era for South Africa’s Treasury

News Tips

Advertise With Us

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