Thomson Reuters/INSEAD Asian Business Sentiment Survey

Transcription

1 CHINA/JAPAN/INDIA/AUSTRALIA/SOUTH KOREA/INDONESIA/TAIWAN/THAILAND/MALAYSIA/SINGAPORE/PHILIPPINES Q Sentiment index 70 in Q vs 71 in Q1 Thai firms most positive, Chinese least Optimism strengthens in Singapore, falls in India Building sector most positive, shipping least Thomson Reuters/INSEAD Asian Business Sentiment Survey

2 A worker cycles past cars made by Hyundai Motor and affiliate Kia Motors at a shipping yard in Pyeongtaek, South Korea, Jan. 20, REUTERS/KIM HONG-JI World financial fears keep Asia firms in holding pattern By Byron Kaye Sentiment at some of Asia s biggest firms has deteriorated as a slowing Chinese economy, Greek sovereign debt crisis and looming U.S. interest rate hike create deepening concern about the state of the world economy, a Thomson Reuters/INSEAD survey showed. The Thomson Reuters/INSEAD Asian Business Sentiment Index fell to 70 for the June quarter, from 71 in March and 74 in the same period last year. A reading over 50 indicates an overall positive view. Though gradual, the decline suggests the wait-and-see approach of top businesses is evolving from a passing phase to ingrained cautiousness as questions persist about the structural soundness of economies in China, Europe and the United States. Progress in some areas is compensated by increasing risks in another, said INSEAD Professor Antonio Fatas. There is increasing concern for China and possibly for other emerging markets in the region as the U.S. Federal Reserve starts raising rates. There is no great excitement to compensate for the risks of the region and the broader world economy. Companies in India recorded the steepest 2

3 fall in confidence, logging 84 from 97 in the previous quarter, as fervour over the election of pro-business Prime Minister Narendra Modi last year gives way to anxiety about whether two rate cuts this year can reignite a sluggish economy. The biggest gainer was Thailand, scoring 94 versus 79, as firms adjusted to the disruption of a May 2014 military coup as well as two rate cuts which the central bank said had stabilised the economy. Chinese firms were the least optimistic for the first time in nine quarters, with a score near flat at 55. The world s secondlargest economy so far this year has grown its slowest in over half a decade dogged by concerns of a property bubble and soft data on retail sales, industrial output and fixed asset investment. Thomson Reuters and global business school INSEAD conducted the poll from June 8 to 20. Of 117 respondents, 40 percent were positive - from 45 percent in the previous quarter - while 60 percent were neutral. None were negative. The biggest risk respondents cited was global economic uncertainty, followed by rising costs. Other risks included regulatory uncertainty and rising competition. PROPERTY BUBBLE Property saw the steepest fall in sentiment of any sector, scoring 77 from 88. Recordlow interest rates lifted demand, but a consequent surge in prices has led to speculation that the sector has become over-valued. Adding to concerns is the impact on demand of the first Fed rate hike in a decade, which is widely expected in September. Normally property sentiment goes down when interest rates start to go up, and we haven t seen any of that, said AMP Capital chief economist Shane Oliver. This is a global phenomenon where we ve got very low interest rates and that s helped buoy property markets and development activity, but by the same token there s been a lot of talk that property bubbles might reinflate. The building sector meanwhile latched onto immediate demand spawned by low rates, recording the survey s brightest outlook of 86, from 79. Unlike property developers, builders are less susceptible to fluctuation in property retail prices. The shipping, finance and auto sectors logged the lowest readings of 56, 57 and 58 respectively. Financials comprised a quarter of respondents citing global economic uncertainty as a risk, followed by technology firms which made up a fifth. Nick Hawkins, chief financial officer at survey respondent Insurance Australia Group Ltd, the country s largest general insurer, said his firm s plans to grow in China, India and Southeast Asia won t be affected by a decline in sentiment. We really see our investment and our strategy into those markets as a long-term venture so I don t think any slow-downs or (changes to) current economic conditions are really impacting our views. Business sentiment index Thomson Reuters/INSEAD Asian Business Sentiment Index Source: Thomson Reuters/INSEAD Biggest percieved risks to business outlook By number of respondents Forex volatility 1 Other* 15 Rising costs 28 Global economic uncertainty 56 Note: Total no. of respondents = 117; includes multiple responses *Includes regulatory change, oil and gas price volatility, increased competition etc. Source: Thomson Reuters/INSEAD MSCI Asia-Pacific

4 People walk on a street in Tokyo s Ginza shopping district, Feb. 15, REUTERS/YUYA SHINO Highlights BY ECONOMY AUSTRALIA: LITTLE CHANGE KEEPS INDEX AT 71 IN Q2 VS 70 IN Q1 Sentiment at Australian firms in the second quarter almost matched the first. Of 12 respondents, five expressed positive outlooks for the next six months and the rest were neutral. The majority also said employment levels changed little over the past three months, as had sales. Chief among risks cited was domestic and global economic uncertainty. CHINA: LACKLUSTRE GROWTH EVIDENT AT 55 IN Q2 VS 54 IN Q1 Just one of 11 Chinese respondents reported a bright outlook, while the remainder were neutral. Similarly, only one firm took on staff over the past three months, though 40 percent saw sales increase. During the second quarter, government data showed factory output steadying but investment growing at its slowest rate in nearly 15 years. Nevertheless, uncertainty surrounding the global economy was cited as the biggest risk to business outlooks, followed by rising costs. INDIA: COOLING EUPHORIA PUTS INDEX AT 84 IN Q2 VS 97 IN Q1 Optimism was buoyant in India, though the country failed to top the sentiment table for the first time in over a year. Last year s election of pro-business prime minister Narendra Modi was met with euphoria, but the slow implementation of economic reform, rising non-performing assets and slowing credit growth has tempered sentiment. Of 19 respondents, 13 reported a positive outlook compared with six neutral, with 15 booking increased sales and seven adding staff. High interest rates and regulatory uncertainty featured alongside global economic uncertainty as risks. 4

5 JAPAN: DOWN FROM NEAR 5-YEAR HIGH AT 60 IN Q2 VS 64 IN Q1 Japan s economy expanded in the first quarter at the fastest pace in a year, emerging from a sales tax hike-induced recession, yet corporate sentiment still fell from the first quarter, which was at its highest since the second quarter of Of 15 respondents, 12 had neutral outlooks whereas three were positive, with more firms reporting increased employment levels than in the previous quarter. Global economic uncertainty was flagged as a primary concern, with rising costs also weighing on sentiment. SOUTH KOREA: MERS WOES KEEPS MOOD AT 69 IN Q2 VS 68 IN Q1 Confidence was little changed in South Korea, a country facing a decline in consumer spending following an outbreak of Middle East Respiratory Syndrome. Five of 13 respondents said their business outlooks were positive while the rest were neutral, with most concerns related to global economic conditions. Eight firms booked increased sales versus nine in the previous quarter. TAIWAN: GROWTH SLOWDOWN REFLECTED IN 63 IN Q2 VS 67 IN Q1 A dip in sentiment in Taiwan reflected expectations for a slowdown in overall demand impeding growth of an exportreliant economy. One company each reported a rise and fall in employment levels, while staffing was unchanged at six. Two firms reported falling sales, whereas the majority reported no change. Most respondents said global economic uncertainty was their main risk. SOUTHEAST ASIA: THAILAND 94 VS 79, PHILIPPINES 78 VS 75, INDONESIA 75 VS 75, MALAYSIA 71 VS 64, SINGAPORE 59 VS 50 The most optimistic businesses were in Thailand - where a military government is restructuring state-controlled firms - as interest rate cuts in March and April along with a weakening baht boosted hopes for increased exports. Seven of eight respondents reported a positive outlook with rising costs being their main risk factor. Six booked a rise in sales compared with four in the prior quarter. Firms in the Philippines were the survey s third-most positive, with seven of nine companies enjoying increased sales. Sentiment was unchanged in Indonesia while in Malaysia, most respondents showed an upturn. In Singapore, optimism returned after three quarters of neutral readings. All 11 respondents retained employment levels over the past three months, but five reported increased sales. Writing by Shihar Aneez 117 companies responded to the Thomson Reuters/INSEAD poll, conducted June 8-20, 2015 Total Economy Australia China India Indonesia Japan S. Korea Malaysia Philippines Singapore Taiwan Thailand Source: Thomson Reuters/INSEAD BUSINESS OUTLOOK for the coming six months 0% 59% 41% NEG. NEUTRAL POSITIVE NEW SALES over the past three months 3% 44% 53% LESS SAME MORE EMPLOYMENT LEVEL over the past three months 3% 76% 21% LESS SAME MORE

6 Men work at a brick factory in Bhaktapur, Nepal, May 17, REUTERS/AHMAD MASOOD Highlights BY SECTOR BUILDING: MOST OPTIMISTIC AT 86 IN Q2 VS 79 IN Q1 Most building materials respondents reported increased sales in the past three months, lending weight to expectations of continued profit growth at Thai and Australian firms on rising demand at home and abroad. In Thailand, domestic political uncertainty was cited as the biggest risk to business outlooks. FOOD: MOST POSITIVE IN 2 YEARS AT 83 IN Q2 VS 80 IN Q1 Optimism among food firms edged up to its highest since the first quarter of 2013, with eight of 12 respondents reporting increased sales over the past three months. Rising costs were by far the biggest risk cited. PROPERTY: STEEPEST DECLINER AT 77 IN Q2 VS 88 IN Q1 Last quarter s most optimistic sector was less sanguine this time, with six of 11 respondents expressing a positive outlook, 6

7 versus the remainder who were neutral. In India, high interest rates featured among the highest business risks. RETAIL: COST FEARS DRAG INDEX TO 75 IN Q2 VS 82 IN Q1 Optimism dipped at retailers yet four of 10 respondents took on more staff over the past three months, and six reported increased sales. Rising costs dominated as the biggest risk. DRUGS: NEUTRALS MATCH OPTIMISTS FOR 75 IN Q2 VS 81 IN Q1 Sentiment at drugmakers eased from an almost three-year high last quarter, as an equal number of respondents polled positive and neutral. Three respondents reported increased sales over the past quarter, the same number as those who said sales were the same. TECH: MOST OPTIMISTIC IN A YEAR AT 71 IN Q2 VS 64 IN Q1 Sentiment reached its highest since this time last year in tech, the survey s most represented sector with 24 respondents. Sales rose at 13 firms over the past three months, stayed the same at nine, and fell at one. The majority said global economic uncertainty was their chief risk, with five citing rising costs. RESOURCES: ENERGY PRICES KEEP SECTOR AT 68 IN Q2 VS 67 IN Q1 Seven of 19 resource firms saw a bright future, while the remainder was neutral. That sentiment was mirrored in the performance of the past three months where most said sales were the same and staffing was unchanged. As well as uncertainty surrounding the global economy, the biggest risks cited included oil and gas price volatility as well as oversupply. AUTOS: ALMOST ALL IN NEUTRAL AT 58 IN Q2 VS 57 IN Q1 All but one automaker cited a neutral outlook, though most reported increased sales over the past three months. The biggest risks included domestic and global economic uncertainty. FINANCIALS: RARE STEP-UP IN OPTIMISM AT 57 IN Q2 VS 55 IN Q1 Two positive responses from 14 ensured financials avoided being the survey s least optimistic sector for the first time in five quarters. The number of firms saying sales improved over the past three months equalled those whose sales were the same. Nearly all cited global economic uncertainty as the chief risk. SHIPPING: RIVALRY ANCHORS SENTIMENT AT 56 IN Q2 VS 58 IN Q1 All but one shipper had a positive outlook, with most seeing no improvement in sales nor an increase in staff over the past three months. Increased competition was a major worry, alongside rising costs and uncertainty about the global economy. Writing by Sagarika Jaisinghani 117 companies responded to the Thomson Reuters/INSEAD poll, conducted June 8-20, 2015 BUSINESS OUTLOOK for the coming six months NEW SALES over the past three months EMPLOYMENT LEVEL over the past three months Total Sector Autos Building Financials Food Drugs Property Resources Retail Shipping Tech 0% 59% 41% NEG. NEUTRAL POSITIVE % 47% 50% 3% 76% 21% LESS SAME MORE LESS SAME MORE Source: Thomson Reuters/INSEAD 7

8 Links Previous polls Jun 2014 Sep 2014 Dec 2014 Mar 2015 FOR MORE INFORMATION, CONTACT: EDITOR: CHRISTOPHER CUSHING COVER PHOTO: Customers at a fast food restaurant are seen behind a window advertisement in Tokyo s Akihabara shopping district, May 19, REUTERS/YUYA SHINO Thomson Reuters All rights reserved Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and the Thomson Reuters logo are registered trademarks and trademarks of Thomson Reuters and its affiliated companies. 8