Financial advisory company Merchantec's CEO Confidence Index increased by six points to 51.4 in the second quarter, driven by a significant improvement in confidence in the consumer staples sector and the recent absence of loadshedding.

The index has experienced notable fluctuations over the past few years. In 2023, it started at 44.4, gradually climbed to 51.4 by year's end, and continued this upward trend into this year, starting at 45.4 in the first quarter.

"These changes indicate a pattern of cautious optimism among CEOs, influenced by varying market conditions and economic pressures," Merchantec Capital said.

The confidence of CEOs in the materials sector increased by 6% to 50.71 points, driven by industry growth expectations, while the IT sector increased to a score of 59.17 points, reflecting an 11% increase in the second quarter.

CEO confidence in consumer staples in the second quarter increased to 59.58, which is a 31% increase. Further, confidence in the consumer discretionary sector decreased by 4%, mainly attributed to economic conditions.

Further, CEO confidence in the financial sector increased by 8%, moving to a score of 59.76, up from 55.54 in the first quarter of 2024.

The industrials sector increased by 13%, moving to a score of 57.98, while communications services remained flat at 85 points.

Confidence in the healthcare sector increased by 10%, driven predominantly by the ability to secure debt, and confidence in the real estate sector increased by 28%, driven by increased confidence relating to industry growth expectations.

The recent formation of the government of national unity Cabinet has sparked hopes for better governance, with CEOs noting significant operational benefits from recent political changes and uninterrupted power supply, said Merchantec Capital.

However, concerns persist about the coalition's effectiveness and adherence to constitutional mandates, with some CEOs sceptical about the potential challenges and economic impacts of policies. Low voter turnout and internal political dynamics are also seen as potential threats to the stability and effectiveness of the Government of National Unity.

"Many CEOs are maintaining a cautiously optimistic outlook, influenced by political stability and the absence of loadshedding."