Shows Thomson Reuters INSEAD Asia Business Sentiment Survey
Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, in association with INSEAD, the leading international business school, today published the Asia Business Sentiment Survey. More than 100 executives in 11 Asia-Pacific countries across a broad range of sectors including autos, financials, resources, technology, food and retail were polled between March 12-19 and of the 74 that replied, 51.35% reported a positive outlook for the next six months, a dramatic increase from the 29.41% reporting a positive outlook in the fourth quarter of 2011.
Additionally, the number of negative responses also dropped dramatically, declining to 4.04% from 14.71% in the fourth quarter of 2011. The overall index reading was 74 in the first quarter of this year compared to 57 in the fourth quarter of 2011.
Here are some highlights from the survey:
- Business sentiment at Asia's top companies rose dramatically in the first quarter, reversing consecutive declines in the previous three quarters despite lingering doubts about the global economy and concerns over rising costs.
- The Thomson Reuters INSEAD Asia Business Sentiment Index <RACSI> rose to 74 in Q1 2012 from 57 in Q4 2011. An index above 50 indicates a positive outlook.
- A resumption of bank lending, improving markets and a relative steadying of the euro zone debt crisis are said by analysts to have contributed to the surge in sentiment, although they cautioned it could be a one-time surge and the next quarter may see a decline.
- Japanese respondents reported a lift in sentiment as manufacturers expect to benefit from projects to rebuild the country's northeast coast, which was devastated by a tsunami and earthquake last year. Companies have already started to ramp up capital expenditures in anticipation of increasing domestic demand, prompting many manufacturers to upgrade their sentiment to neutral in January-March from negative the previous quarter.
- In China, an expected slowdown in Asia's largest economy this year has done little to shake business confidence, as Chinese firms continued to be the upbeat on sentiment. Eight firms said sentiment was positive, while the same number were neutral. However, one aviation company reported a marked deterioration in its economic view, swinging to negative from positive in October-December.
- Indian companies were more positive about their businesses, heartened by an expected pick-up in domestic economic growth in the 2012/13 financial year after a slump at the end of last year. Six firms reported positive responses, up from four in the previous quarter, while two were neutral.
- More than 50% of banks and insurers responded positively on the outlook for their companies on hopes the financial sector could see increased growth compared with the last quarter where 10 of 13 companies surveyed were neutral. Banks in Singapore, China and India were more upbeat whereas Australian banks held a neutral outlook. Economic uncertainty, caused by the Greek debt crises and slowing growth in China, continues to be the main concern for 11 of the 13 banks surveyed.
- "Last year there was all this talk about Europe blowing up and hard landings in the U.S. and China. Some of those fears have faded," said Shane Oliver, chief economist at AMP Capital Investors in Sydney. "It's the whole package of better news about the global economy, which has probably led to improved sentiment. It would be wrong to say it was just Europe, or just the U.S."
- Companies that participated in the poll included Japan’s Toshiba <1983.T>, Nippon Steel <5401.T>, Fujitsu <6702.T>, China’s Sinopec (China Petroleum and Chemical Corp) <0386.HK> <60028.SS> and Galaxy Entertainment <GALE.BO>, India’s DLF <DLF.NS> and Coal India <COAL.NS>.
Please refer to the full Reuters-INSEAD Asia Business Sentiment Survey for more information.
Matt Driskill, senior editor in charge of the survey at Thomson Reuters is available for comments and interviews. He can be reached at [email protected] and +65 6870 3720.
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