Thomson Reuters/INSEAD Asian Business Sentiment Survey

Transcription

1 CHINA/JAPAN/INDIA/AUSTRALIA/SOUTH KOREA/INDONESIA/TAIWAN/THAILAND/MALAYSIA/SINGAPORE/PHILIPPINES Q Sentiment index rises to 67 in Q2 from 65 in Q1 Rising Chinese corporate debt seen as chief risk Philippines most optimistic economy, Japan least Retail and leisure sector most optimistic Thomson Reuters/INSEAD Asian Business Sentiment Survey

2 A brokerage s stock price board shows zeros before trading starts after the week-long Lunar New Year holiday, Shanghai, China, Feb. 15, REUTERS/ALY SONG Asia sentiment hits year high as China s economy steadies BY RANDY FABI Sentiment at Asia s biggest companies climbed to its highest in a year in the second quarter of 2016, helped by signs that China s economy was slowly steadying, a Thomson Reuters/ INSEAD survey showed. During the quarter, China reported a marginal decline in May imports that was far less than market expectations, reflecting a pick-up in domestic demand as the government raises spending on infrastructure projects to support growth. The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the six-month outlook of 139 firms, rose to 67 for April-June versus 65 three months prior continuing a rebound from a fouryear low of 58 in December. A reading over 50 indicates a positive view. In China, corporate sentiment is at its highest in almost a year, with respondents including China Jo Jo Drugstores producing a subindex of 75, up from 71 in the previous survey. What we are seeing today relative to the 2

3 past two quarters is that Chinese risk has gone down. People are a little bit less worried about the possibility that something sudden will happen in China, said Singapore-based economics professor Antonio Fatas at global business school INSEAD. Rising corporate debt in China and its potential to handicap long-term growth was, however, the most cited risk to companies outlooks, which also included volatile oil prices, central bank policies and terrorism. Indonesia recorded the quarter s biggest rebound in sentiment with a 22-point jump in its subindex to 64, also helped by government spending on public works. We are very much affected by the slowdown of the global economy, especially from China, said Corporate Secretary Agung Wiharto at state-controlled cement maker Semen Indonesia. But we are confident things will be better in the second half, mainly because of the (Indonesian) government s infrastructure spending. Sentiment also improved in the Philippines, which logged the highest sentiment subindex for the fourth consecutive quarter. The business mood was weakest in Japan, Asia s second-biggest economy, plummeting 31 points to a survey-low of 46 as companies worried about stagnating consumption. Japanese firms also feared further appreciation in the yen, echoing concerns from policymakers who have said yen strength could be exacerbated if Britain votes to leave the European Union. RETAIL, LEISURE FIRMS UPBEAT By sector, companies engaged in retail and leisure were the most upbeat with a subindex rising to 82 from 77, as the majority of respondents reported an increase in business volume over the past three months. Sentiment fell the most in the household, food and beverage sector, by 33 points to 67, while construction and engineering firms yielded the survey s lowest subindex - falling to a neutral 50 from 70 three months prior. Both sectors mentioned the state of China s economy among their biggest concerns. Thomson Reuters and INSEAD polled companies from June 6 to 18. Of 139 respondents, 46 percent rated their six-month outlook as positive, 43 percent were neutral and 12 percent were negative. Respondents included Indian motorcycle maker Hero MotoCorp, Japanese electronics manufacturer Panasonic, Philippine conglomerate San Miguel and South Korea s Hyundai Heavy Industries. The index started in 2009 with a record low of 45, but has largely hovered between 60 and 70 since hitting a record high of 80 at the beginning of The economy has been going sideways for the last few years, said INSEAD s Fatas. What we are seeing is what many people are calling the new mediocre state of the world economy. It is not going as low as 2009, but it is not rising to the level that we have seen in the past. Business sentiment index Thomson Reuters/INSEAD Asian Business Sentiment Index Source: Thomson Reuters/INSEAD Biggest perceived risks to business outlook By number of responses 7 U.S. election uncertainty 23 China s rising corporate debt 7 Britain leaving the EU 20 Low oil prices 70 Others* Note: Total no. of valid responses = 127. * Includes foreign exchange volatility, global economic uncertainty, rising competition, etc. Source: Thomson Reuters/INSEAD MSCI Asia-Pacific* * MSCI International All Country Asia Pacific Price Index USD monthly 3

4 A worker checks an oil pipe valve at the Imilorskoye oil field outside the western Siberian city of Kogalym, Russia, Jan. 25, REUTERS/SERGEI KARPUKHIN Highlights BY ECONOMY PHILIPPINES: FOURTH TIME MOST UPBEAT AT 86 IN Q2 VS 85 IN Q1 Boosted by first-quarter economic growth that beat market expectations, nine of 11 firms polled said they had a positive outlook for the coming six months, while one was neutral and another negative. Metropolitan Bank and Trust, Nickel Asia and San Miguel featured among the 11 firms, which said chief risks to six-month outlooks included rising competition and slowing Chinese economic growth. Seven firms also reported higher sales and orders over the past three months with four taking on more staff. INDIA: LOW OIL PRICES, FOREX WORRY PULL SUBINDEX TO 78 VS 83 Seventeen of 25 Indian firms expressed optimism for the coming half-year whereas five were neutral and three pessimistic. But the subindex fell 5 points to 78, with volatile oil prices topping the list of outlook risks, while excessive foreign exchange volatility was also a concern. Of the respondents, which included Hero MotoCorp and Reliance Industries, 15 said they enjoyed increased business compared with three months prior. Nine reported improved asset quality, and seven added headcount. 4

5 CHINA: OPTIMISM RISES TO 75 VS 71, VARIED RISKS CITED Five of eight respondents were upbeat about the second half of 2016 while two were neutral and one negative. The primary risk factors that companies highlighted varied, with government policies, yuan depreciation and terrorism featuring among concerns. China Jo Jo Drugstores was one of the respondents. Two firms booked more business over the past three months and two saw improvement in the quality of assets. Three said they had added headcount. INDONESIA: SURVEY S STEEPEST UPTURN IN SENTIMENT AT 64 VS 42 Fourteen companies from Indonesia responded to the survey, including Cowell Development, Hanson International and Kalbe Farma. Overall, sentiment was far more bullish compared with three months previously, with eight companies reporting a positive outlook, two neutral and four negative. Key risks included currency swings and low energy prices. Though sentiment turned bullish, activity over the quarter reflected the negative outlook of the previous survey: Staffing and asset quality are largely unchanged from three months prior, while eight companies reported a decline in business volume. JAPAN: SURVEY S MOST PESSIMISTIC WITH SUBINDEX AT 46 VS 77 Sentiment fell the most this survey in Japan, where firms said they were worried about stagnating consumption and exchange rate fluctuation. Eleven of 12 respondents were neutral towards the coming six months and one was negative. Business volume, asset quality and staffing levels were almost unchanged compared with three months prior. INCREASED OPTIMISM Elsewhere, South Korea and Taiwan recorded their highest number of positive responses. In Korea, 6 of 11 companies were optimistic about the coming six months, taking the economy s subindex to 73 from 70. In Taiwan, 5 positive responses out of 11 helped the economy s subindex swing to 64 from 44. Sentiment rose in Australia to 69 from 63, reached a two-year high in Singapore at 63 from 50, and swung positive in Malaysia to 55 from 45. Sentiment was also positive in Thailand, though its subindex fell to 59 from 67. Note: Companies surveyed change from quarter to quarter. Writing by Anu Bararia Outlook by economy Total BUSINESS OUTLOOK for the coming six months NEG. NEUTRAL POSITIVE VOLUME OF BUSINESS over the past three months STAFFING over the past three months LOWER SAME HIGHER LOWER SAME HIGHER Australia China India Indonesia Japan Korea Malaysia Philippines Singapore Taiwan Thailand Source: Thomson Reuters/INSEAD 139 companies responded to the Thomson Reuters/INSEAD poll, conducted June 6-18,

6 Chinese tourists stand outside a department store in Tokyo, Japan, Feb. 4, REUTERS/THOMAS PETER Highlights BY SECTOR RETAIL & LEISURE: SURVEY S MOST OPTIMISTIC AT 82 IN Q2 VS 77 IN Q1 Seventeen companies that broadly fall into the retail and leisure sector responded to this quarter s survey, including Japan s Fast Retailing, South Korean online games maker NC Soft, the Philippines Bloomberry Resorts and Thai hotelier Minor International. Eleven said they were positive about their six-month business outlook whereas six were neutral. Six said the chief risk to their outlook was the fallout from a rise in Chinese corporate debt. Ten firms reported a rise in business volume compared with three months prior, four said asset quality had improved, and five took on more staff. ENERGY & UTILITIES: MORE BUSINESS SEES INDEX UP TO 68 VS 54 Five of eleven energy firms and utilities that included Thailand s PTT and Ratchaburi Electricity Generating offered a positive outlook for the coming half-year, whereas five were neutral and one negative. Key outlook risks included deterioration in China s economy, the U.S. Federal Reserve s monetary policy and low crude oil prices. Four respondents said the volume of business had risen over the past three months and three reported improvement in asset quality, while just two increased staff. HOUSEHOLD, FOOD & BEVERAGE: STEEPEST-EVER FALL TO 67 VS 100 Of nine respondents, which included Japanese brewery Asahi and Philippine snack food maker JG Summit, four could see 6

7 a bright second half whereas one was of the opposite opinion and the rest neutral. Each respondent cited a different risk to their outlook. These included rising Chinese corporate debt, low oil prices, currency volatility, stagnating consumption and the impact of Britain voting to leave the European Union bloc on June 23. Most respondents cited no change in the quality of assets or number of employees over the past three months. Two firms reported a rise in business volume while another two reported a fall. FINANCIALS: QUARTER S STEEPEST RISE IN SENTIMENT TO 65 VS 47 Eight firms were positive about the next six months, while 14 were neutral and one was negative. Respondents included Union Bank of the Philippines and compatriot Metropolitan Bank and Trust. Rising corporate indebtedness in China was by far the chief risk cited, with other risks including changes to central banks policy interest rates, competition and diplomatic disputes. Nine booked a rise in the volume of business and six reported improved asset quality, while five added personnel. CONSTRUCTION & ENGINEERING: ONLY NON-POSITIVE AT 50 VS 70 Six of eight respondents categorised as construction and engineering firms offered a neutral outlook for the coming half-year while one gave a positive view and another was pessimistic. Australia s James Hardie Industries, India s Reliance Infrastructure, Japan s Hitachi and South Korea s Hyundai Heavy Industries featured among respondents who said the top risks to their outlooks were low energy prices, a slowing Chinese economy and change in government policy. Three companies saw a loss of business volume compared with three months prior and three cut headcount. MOST OTHER SECTORS RISE Sentiment also rose in the technology and telecommunications sector, to 65 from 57, and in transport and logistics, to 64 from 50. In metals and chemicals, sentiment edged up to 64 from 63. Companies in the real estate and autos sectors again registered sentiment subindexes of 63, as in the first quarter, while optimism was shaken somewhat among healthcare firms, whose subindex fell to 72 from 92. Note: Companies surveyed change from quarter to quarter. Writing by Anu Bararia Outlook by sector Total BUSINESS OUTLOOK for the coming six months NEG. NEUTRAL POSITIVE Autos Construction & Engineering Transport & Logistics Energy & Utilities Financials Healthcare Household, F&B Metals & Chemicals Real Estate Retail & Leisure Tech & Telecom VOLUME OF BUSINESS over the past three months STAFFING over the past three months LOWER SAME HIGHER LOWER SAME HIGHER Source: Thomson Reuters/INSEAD 139 companies responded to the Thomson Reuters/INSEAD poll, conducted June 6-18,

8 Links Previous surveys June 2015 September 2015 December 2015 January 2016 FOR MORE INFORMATION, PLEASE CONTACT: EDITOR: CHRISTOPHER CUSHING COVER PHOTO: A woman walks her dog in a valuable yet undeveloped area of Guangfuli in Shanghai, China, April 8, REUTERS/ALY SONG 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