Australian CFOs are starting to feel a little optimism after a subdued year, according to a March quarter survey by Deloitte of the heads of finance at major listed companies.
A lower Australian dollar and record low interest rates appear to be the main driver of the shift in sentiment.
However, federal government policy, the budget to be brought down on May 12 by Treasurer Joe Hockey, leadership uncertainty in Canberra and the slowing Chinese economy continue to weigh on the minds of CFOs.
Some 21% have a more positive attitude about the prospects of their companies than three months ago and are more prepared to take on financial risk.
Stephen Gustafson, Deloitte’s assurance and advisory partner, says CFO optimism has returned but it hasn’t reached the levels of a year ago.
“And this change certainly begs a question – has a tipping point been reached in terms of more positive sentiment and an associated shift in corporate investment and growth strategies?” he says.
Risk aversion and an overall sense of caution were recurring themes for much of 2014.
But net optimism has grown from 6% in the fourth quarter of 2014 to 21% in the first quarter of this year.
More than 50% of CFOs believe now is a good time to be taking on risk, up 24% from the previous quarter.
However, concerns remain about federal government policy and stability.
“Policy uncertainty, budget repair, leadership instability and hesitation regarding the reform agenda continue to have an impact on business confidence and were a negative factor for net 55% of CFOs,” he says.
The Deloitte CFO Survey targets the CFOs of major Australian listed companies. The latest took place between March 17 and April 3 with 52 CFOs, representing businesses with a combined market value of about $251 billion or 14.28% of the Australian quoted equity market, taking part.
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