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Asian Companies Less Upbeat – Asia 3Q13 Business Sentiment Survey
Perspective | 18 September 2013
By Reuters

Asia’s top companies were less upbeat about their business outlook in the third quarter of 2013 as concerns about the global economy and rising costs dampened sentiment, the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey published on 18 September 2013 showed.

Global uncertainty on when the US Federal Reserve will taper its US$85 billion bond buying programme and geopolitical tensions in Syria have spooked markets, dealing a blow to business outlook.

The Thomson Reuters/INSEAD Asia Business Sentiment Index fell to a reading of 66 in September 2013 from 71 in the second quarter. A reading above 50 indicates an overall positive outlook.

Australia: Moderately Higher (Index at 79 vs 75 in 2Q13)
Corporate confidence in Australia rose to match highs hit in the first quarter of 2012 as the conservative coalition won a landslide victory in the federal election, bolstering sentiment. Incoming prime minister, Tony Abbott, has declared Australia as “open for business”.

Of the seven respondents, four were positive while three remained neutral about the business outlook. In the previous quarter there were 14 respondents, with seven neutral and seven having a positive outlook.

The majority of respondents cited global economic uncertainty as their main source of concern and said the number of new orders remained the same.

China: Steady (Index at 50 vs 50 in 2Q13)
Business sentiment in China remained flat for a third consecutive quarter as all eight companies surveyed said their business outlook remained neutral.

Five respondents cited the world economy as their biggest concern while the remainder flagged rising costs as their primary worry. One respondent reported a rise in employment compared to none last quarter while three said new orders had increased.

India: Slight Improvement (Index at 67 vs 63 in 2Q13)
Optimism returned to India, lifting its sentiment index moderately higher after a drop last quarter.

Three respondents said their main concern was a shaky world economy while a rout in the rupee in August 2013 also rattled sentiment with a third of companies worried about foreign exchange rates. Two respondents reported a lift in employment while five said new orders had risen.

Political instability was also cited as a concern from one company.

Lupin Pharmaceuticals, India’s fourth-largest drugmaker by sales, and electricals retailer, Godrej & Boyce, were among the participants.

Japan: Steady (Index at 63 vs 63 in 2Q13)
Business confidence remained steady in Japan at 63, its highest point since June 2010 among the 20 companies surveyed, which included tech giant, Canon, and global pharmaceutical company, Daiichi Sankyo.

Half the respondents said global economic uncertainty was a primary concern while the remainder cited rising costs and exchange volatility as roadblocks to any moves higher. Two companies saw an increase in employment while two had decreased; the remaining 16 saw the same levels as the previous quarter.

South Korea: Significantly Lower (Index at 50 vs 64 in 2Q13)
Corporate sentiment slumped to 2013 first-quarter lows of 50, as six of the nine respondents said global economic uncertainty was the biggest risk to businesses this quarter.

Four companies said it saw a rise in new orders while the remainder stayed the same. In employment, one company said its levels of employment increased but the remaining eight were unchanged.

Hyundai Heavy Industries was among the participants in the survey.

Taiwan: Downbeat (Index at 50 vs 67 in 2Q13)
Taiwan saw its business sentiment slump to 50, its lowest point since the fourth quarter in 2012. Electronics company, Acer, was among those surveyed.

Eighty percent of respondents said the biggest risk to businesses was global economic uncertainty while the remainder cited rising costs as their primary concern.

Two companies said employment levels had increased, while one reported a rise in new orders, a slight improvement from last quarter.

Southeast Asia (Philippines at 100 vs 94; Thailand at 71 vs 42; Malaysia at 69 vs 83; Singapore at 50 vs 83; Indonesia at 25 vs 100)
Sentiment in Southeast Asia was mostly upbeat with the Philippines posting unanimous confidence across all 12 companies surveyed, an uptick from the previous quarter.

Businesses in Thailand were mostly positive, strengthening from multi-year lows hit last quarter, with three positive about business outlook and four remaining neutral.

Both Malaysia and Singapore fell from the previous quarter with the majority of businesses in both countries citing uncertainty in the global economy as the biggest risk.

Indonesia had the lowest index score, slumping from last quarter’s perfect outlook as businesses cited domestic inflation and global uncertainty for a bleak outlook.

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