Asian business sentiment continues slide

Business sentiment at Asia’s top companies declined for a second consecutive quarter in 2012 due to continued worries over the global economy, according to the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey.

The poll was conducted between 3 and 14 September 2012 and of the 97 companies that responded, 32.99 per cent reported a positive outlook for the next six months, a decline from the 44.07 per cent positive response in the second quarter. The number of negative responses increased to 9.28 per cent from 6.78 per cent in the second quarter. Neutral responses rose to 57.73 per cent from 49.15 per cent.

Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, in association with INSEAD, the leading international business school, polled more than 200 executives in 11 Asia-Pacific countries across a broad range of sectors including autos, financials, resources, technology, food and retail.

Highlights from the survey include:

Global economic uncertainty was the key risk factor cited by 54 of the 97 respondents, followed by 15 companies citing “other” risks that included domestic uncertainty, regulatory uncertainty and oil prices. Eight companies cited rising costs as their main risk while four cited foreign exchange worries.

Drug companies were the most upbeat with an index reading of 80, followed by the property sector with a reading of 75 and then the food industry with a reading of 73. The building sector was the most pessimistic with an index reading of 33, followed by the auto, retail and shipping sectors with index readings of 50 each.

The Philippines and Indonesia were the most positive countries with readings of 100 each – the second consecutive quarter for the Philippines, while South Korea came in deep negative territory with a reading of 20, followed by Taiwan with an index reading of 40 and Japan with a reading of 48.

Employment levels appeared relatively stable in the survey with 66 companies reporting the same employment levels as in the second quarter, 19 reporting higher employment and 11 reporting reduced levels. (Note: Not all companies reported this data segment).

Forty-seven companies reported orders and sales were roughly the same as the previous quarter, 39 said sales increased and eight reported sales were down compared to the previous quarter.

Eighty-seven companies said customer payments were roughly the same as the previous quarter (on a timely basis), three reported increased delays and three reported reduced delays.

The Thomson Reuters/INSEAD Asia Business Sentiment Index declined to 62 in Q3 2012 from 69 in Q2 2012. An index above 50 indicates a positive outlook.

The index surveyed sentiment at 200 companies in 11 countries in Asia and received 97 responses.

The index was compiled between 3-14 September from a poll of senior executives at Asia’s top companies representing industries from autos and banks to technology, resources and property.

The full survey highlights can be viewed online at: http://graphics.thomsonreuters.com/12/09/ASIA_SEPT.pdf