Economy
CEO Confidence Rises Despite New Risks, Uncertainty—PwC
By Modupe Gbadeyanka
Worldwide, CEOs’ confidence levels for their growth prospects and outlook for the economy is back on the rise amidst new risks and uncertainty.
In PwC’s 20th annual survey of CEOs worldwide, 38% (2016:35%) are very confident about their company’s growth prospects in the next 12 months while 29% (2016:27%) believe global economic growth will pick up in 2017.
Just over one-third (33%) of South African CEOs are very confident of their company’s own growth in the next 12 months, 4 points down on last year, and 5 points below this year’s global average (38%). Furthermore, only 19% expect global economic growth to improve in the next 12 months, 10 points below the global average.
Commenting on the survey results, Dion Shango, CEO of PwC Southern Africa, says: “Despite significant challenges in 2016, CEO confidence is on the rise – albeit slowly and still has some way to go from the levels that we saw back in 2007. Across the globe, there are signs of optimism despite mixed views on how the global economy will respond to the recent US presidential election result as well as the outcome of the UK Brexit vote.”
The global survey results, based on interviews with 1379 CEOs from 79 countries, were released at the World Economic Forum annual meeting in Davos yesterday. In South Africa 36 CEOs from a broad spectrum of listed and privately-owned companies participated in our survey.
“It is positive to note that local CEOs expect to increase their headcount in the next 12 months. CEOs are promoting talent diversity and inclusiveness; they have implemented strategies to reflect the skills and employment structures needed for the future,” Shango comments.
PwC’s annual 20th Global CEO Survey explores what CEOs in 2017 think about three imperatives: a people and technology strategy that is fit for the digital age, preserving trust in a world of increasingly virtual interactions, and making globalisation work for everyone by engaging even more with society and collaborating to find solutions.
“The challenge to all three imperatives is leadership. How leaders engage with employees and stakeholders has never been more important. A company’s strategy must be built upon a long-term vision of growth, access, equality, innovation, and the human endeavour,” adds Shango.
Where CEOs will look for growth
PwC’s first global survey (1997) showed emerging markets – including China and India as a sure bet for success. But the changeability of markets, exacerbated by current volatility, has caused CEOs to turn to a greater mix of countries. This year’s survey shows the US, Germany and the UK have become bigger priorities, while enthusiasm for investing in Brazil, India, Russia and Argentina has lessened from three years ago.
South African CEOs named China (36%), the UK (31%), the US (25%) and India (22%) as the most important countries for their organisation’s overall growth prospects.
New York (8%), Tokyo (8%) and London (19%) were also identified as the most important cities to an organisation’s overall growth prospects over the next 12 months.
Threats
While 91% of South African CEOs are very confident of their company growth over the next three years, their levels of concern about exchange rate volatility (92%), uncertain economic growth (92%), overregulation (89%), social instability (89%), and geopolitical uncertainty (83%) remain very high.
Of business threats, 89% (compared to 77% globally) of South African CEOs cited the availability of key skills, 69% (compared to 49% globally) cited volatile energy costs, 67% (compared to 61% globally) cited cyber threats, and 64% (compared to 70% globally) stated the speed of technological change as concerns.
Driving corporate growth
This year, 83% of South African CEOs (compared to 79% globally) plan to expand by way of organic growth in the next 12 months. Sixty-nine percent of local CEOs (compared to 62% globally) plan to implement a cost-reduction initiative. In addition, 61% of CEOs (compared to 48% globally) plan to enter into a new strategic alliance or joint venture, and 53% (compared to only 41% globally) propose a new M&A.
Technology and Trust
CEOs say that technology is now inseparable from a business’ reputation, skills and recruitment, competition and growth. Sixty-one percent of South African CEOs say technology has either completely reshaped or had a significant impact on competition in their industry. Furthermore, 75% say it will have a major impact in the next five years.
Twenty years ago, trust wasn’t high on the business agenda for CEOs. This year, 58% of CEOs globally worry that a lack of trust in business will harm their company’s growth, up from 37% in 2013. After several high-profile technology and security issues for big companies, CEOs identified cyber security, data privacy breaches and IT disruptions as the top three technology threats to stakeholder trust. More than half of South African CEOs (58%) cited risks from the use of social media, 53% cited breaches of data privacy and ethics, and 50% cited cyber security breaches as concerns.
Headcount and talent
Concern about skills has more than doubled in 20 years (from 31% concerned in 1998 to 77% in 2017) and human capital is a top three business priority, with diversity and inclusiveness and workforce mobility amongst the strategies being used to address future skill needs. Skills availability is a concern for over three quarters (77%) of business leaders, and is highest for CEOs in Africa (80%), and Asia Pacific (82%).
More than half of South African CEOs (58%) expect to increase their headcount in the next 12 months, with 14% planning to cut their workforce.
Impact of globalisation
More than half of CEOs (58%) globally think it has become harder to balance globalisation with rising trends in protectionism. For the past 20 years CEOs have largely been positive about the contribution of globalisation to the free movement of capital, goods and people. However, this year’s survey respondents are sceptical that it has mitigated climate change or helped create full and meaningful employment to close the gap between rich and poor.
Seventy-two percent of South African CEOs (compared to 62% globally) said globalisation had to a large extent helped with universal connectivity, and 44% (compared to 60% globally) said it had helped with improving the ease of moving capital, people, goods and information.
Concludes Shango: “Looking forward, CEOs will require a different set of skills. The events of the past year have shown us just how interconnected the interests of shareholders and other stakeholders really are. Those businesses that articulate their purpose, anticipate risks and adhere to the value they profess will thrive. Businesses that ignore the power of the people will jeopardise the growth they seek.”
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
