SA corporates maintain positive sentiment despite uncertainties

RESILIENT South African corporates and investors have adopted an overall positive sentiment on the economy on the back of expected strong earnings, despite risks emanating from fiscal pressures, tensions with the United States and government of national unity (GNU) disagreements.

- TAWANDA KAROMBO

Bank of America economists and analysts said on Thursday that South African corporates are optimistic of a positive earnings outlook.

Michael Kafe, head of South Africa research at Bank of America Merill Lynch, said South African firms “have exhibited resilience despite a pile of headwinds” such as logistics logjams they have had to deal with over the past few years.

However, the overall sentiment, we’d say, from corporates was positive. “That is mainly attributable to the earnings growth outlook,” said Kafe’s during a virtual briefing with media.

The vast majority of SA companies are speaking about strong earnings growth in the coming years, with many even alluding to “double digit growth.”

Nonetheless, this rosy outlook was not premised on a solid outlook of GDP growth for South Africa. The robust growth outlook for corporate SA earnings was being driven by “innovations” and “focused investments” in areas such as technology and Artificial Intelligence.