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.
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.”
BUA Cement, Nigerian Breweries, Others Drive Stock Market’s 0.06% Loss
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited recorded a 0.06 per cent loss on Friday as a result of the selling pressure on some blue-chip stocks at the bourse.
It was observed that the decline was mainly driven by the poor performances of financial and industrial goods shares during the trading session.
Data obtained by Business Post showed that the insurance space lost 1.01 per cent, the industrial goods counter depreciated by 0.66 per cent, the banking sector declined by 0.25 per cent, and the consumer goods category shed 0.21 per cent, while the energy index remained flat.
Consequently, the All-Share Index (ASI) moderated by 31.55 points to 54,892.53 points from 54,924.08 points, and the market capitalisation went down by N18 billion to N29.903 trillion from N29.921 trillion.
A total of 137.6 million shares valued at N3.9 billion exchanged hands in 2,912 deals on the last trading session of the week compared with the 117.9 million shares worth N1.4 billion traded in the preceding session in 2,575 deals, representing an improvement in the trading volume, value and the number of deals by 16.71 per cent, 178.57 per cent, and 13.09 per cent, respectively.
Fidelity Bank closed the session as the most traded equity after it sold 21.5 million units and was trailed by GTCO, which sold 14.9 million units. Neimeth traded 14.0 million shares, UBA exchanged 12.8 million equities, and Transcorp traded 8.9 million stocks.
Investor sentiment was slightly strong yesterday as the market breadth was positive with 13 price gainers and 11 price losers led by AIICO Insurance, which fell by 5.00 per cent to 57 Kobo.
Linkage Assurance depleted by 4.76 per cent to 40 Kobo, Coronation Insurance went down by 4.76 per cent to 40 Kobo, International Breweries depreciated by 2.25 per cent to N4.35, and Transcorp lost 2.19 per cent to trade at N1.34.
On the flip side, NPF Microfinance gained 6.94 per cent to finish at N1.85, Geregu Power appreciated by 6.25 per cent to N323.00, Lasaco Assurance rose by 5.00 per cent to N1.05, Chams grew by 4.17 per cent to 25 Kobo, and Japaul improved by 3.57 per cent to 29 Kobo.
Analysis of the market data indicated losses reported by BUA Cement (1.60 per cent), Nigerian Breweries (0.55 per cent), GTCO (0.25 per cent), and Zenith Bank (0.15 per cent) caused the downfall of the exchange on Friday.
Again, NASD OTC Exchange Valuation Crosses N1 trillion
By Adedapo Adesanya
The market capitalisation of the NASD Over-the-Counter (OTC) Securities Exchange recorded a 5.3 per cent appreciation at the final session for the week, Friday, March 24, to close at N1.01 trillion from N959.06 billion on Thursday.
Business Post reports that this is the second time the value of the NASD OTC exchange would cross the N1 trillion mark.
The first was when Access Bank Plc was admitted to the alternative stock exchange in March 2022 and about a year later, it again crossed the same mark after Purple Real Estate Income Plc joined the platform on Thursday and began trading the next day.
Meanwhile, the NASD Unlisted Securities Index (NSI) grew by 0.5 points or 0.07 per cent yesterday to wrap the session at 730.37 points compared with 729.87 points recorded in the previous session.
The day’s single price gainer was Geo-Fluids Plc, which improved its value by 16 Kobo to close at N1.80 per share versus Thursday’s closing price of N1.64 per share.
The volume of securities traded by investors depreciated on Friday by 67.3 per cent to 1.7 million units from 5.2 million units, the value of transactions slumped by 87.2 per cent to N3.1 million from N24.3 million, while the number of deals decreased by 78.6 per cent to three deals from the 14 deals carried out in the previous trading day.
Geo-Fluids Plc remained the most traded stock by volume on a year-to-date basis with 462.1 million units valued at N505.0 million, UBN Property Plc stood in second place with 365.8 units valued at N309.5 million, while IGI Plc was in third place with 71.1 million units valued at N5.1 million.
In terms of the most traded stock by value on a year-to-date basis, VFD Group Plc was on top of the chart for exchanging 7.3 million units worth N1.7 billion, followed by Geo-Fluids Plc with 462.1 million units valued at N505.0 million, and UBN Property Plc with 365.8 million units valued at N309.5 million.
Naira Appreciates at Official Market, Loses at Peer-to-Peer, Black Market
By Adedapo Adesanya
It was a mixed bag for the Naira at the foreign exchange (forex) market on Friday as its value closed stronger against the United States Dollar in the Investors and Exporters (I&E) side of the market but was weaker in the Peer-to-Peer (P2P) and the parallel market.
Data showed that the local currency gained 34 Kobo or 0.07 per cent against its American counterpart to trade at N461.33/$1 compared with the previous day’s value of N461.67/$1.
It was observed that the Nigerian currency gained weight during the session despite being pressed by FX demand pressure, resulting in the sale of $241.38 million worth of forex at the close of transactions, $161.35 million or 66.8 per cent higher than the $80.03 million recorded in the preceding session.
In the P2P window, the domestic currency lost N1 against the US Dollar to settle at N756/$1, in contrast to the N755/$1 it was sold a day earlier.
In the same vein, the Naira depreciated against the greenback in the black market yesterday by N1 to close at N743/$1 compared with Thursday’s closing rate of N742/$1.
However, in the interbank segment, the Nigerian Naira closed flat against the Pound Sterling and the Euro on Friday at N566.08/£1 and N497.72/€1, respectively.
In a related development, the digital currency market was in the red as most of the tokens tracked by Business Post depreciated in price, as the markets reacted to the latest Federal Reserve interest rate hike. The Fed opted to increase rates by 25 basis points (bps) as many had anticipated and signalled one more hike this year.
Bitcoin (BTC) slid by 3.0 per cent to $27,458.80, Ethereum (ETH) dropped 3.8 per cent to $1,745.28, Solana (SOL) lost 6.3 per cent to trade at $20.61, Litecoin (LTC) went down by 2.9 per cent to $92.64, Dogecoin (DOGE) shrank by 2.3 per cent to $0.0748, Cardano (ADA) declined by 2.2 per cent to $0.3586, and Binance Coin (BNB) went down by 1.1 per cent to trade at $323.15, while Ripple (XRP) appreciated by 2.2 per cent to $0.4465, with Binance USD (BUSD) and the US Dollar Tether (USDT) flat at $1.00 apiece.
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