Markets strengthen on strong business sentiment since last December
THE MARKETS strengthened yesterday with stocks rising to a record high and the rand dipping below the R15.30 mark to the US dollar on the back of strong business sentiment for December and January. The JSE All Share Index rose by almost 1 percent to another record high of 76 715 index points by 4pm, driven by gains in Sappi, Mondi, Richemont and Naspers.
The rand also lifted by 0.11 percent to R15.35 to the US dollar by 4pm, tracking positive global cues and strong January business sentiment, after touching R15.27 during intraday trade.
The South African Chamber of Commerce and Industry (Sacci) said yesterday that the business confidence index (BCI) increased by 2.1 index points to 94.9 points between December and January.
Business confidence sank to 92.8 points in November from 94.9 points in October as the industry was sceptical of activity owing to the gradual lifting of lockdown restrictions. Sacci said the January BCI print was mainly driven by increased trade and retail sales, particularly new vehicle sales.
It also said that increased merchandise imports, exports and retail trade volumes contributed to the higher BCI, while rising inflation and higher debt servicing costs were also factors.
“The relatively stable January 2022 BCI compared to a year ago indicates a positive but delicate balance,” it said.
“Between January 2021 and January 2022, the Sacci BCI dipped marginally by 0.4 of an index point. Given the difficult economic circumstances, this is a positive start to 2022.”
The sub-indices that supported this level of confidence were mainly increased merchandise export volumes, higher new-vehicle sales and higher share prices on the JSE than a year ago.
However, Sacci said higher inflation, a lower real value of approved building plans and lower international precious metal prices weighed on the BCI reading in January.
“Despite non-economic incidents having a negative impact on the economy, business resilience and tenacity kept the economy from being distracted into uncertainty and dismay.
“Further, despite the fact that the business climate is not ideal, particularly for attracting much-needed fixed investment, society is determined to work toward a more stable social environment and a growing economy.”
Sacci said the upcoming Budget would be a significant event, and it was critical that a path forward became clear.
“Issues such as public and private debt levels, credit and investment ratings, service delivery, and dealing with maladministration and corruption in the public sector are critical to reviving business and investor confidence.
“The inability of Eskom to provide reliable and reasonably priced power, as well as disrupted provincial and municipal infrastructure, raises the cost of doing business in South Africa and continues to be an impediment to investment.
“These are significant physical impediments to creating more jobs and accelerating economic growth. As a result, the promise of service delivery to improve social order could not be fulfilled.”