Companies in Asia grow more optimistic
Survey finds third consecutive quarterly climb in business sentiment as extreme fears fade
Asia's top companies have become more optimistic about their business outlook with the retail and shipping industries rebounding sharply in the second quarter of 2013, the latest Thomson Reuters/Insead Asia Business Sentiment survey shows.
The Asia Business Sentiment Index climbed six points to 71 in June, its highest level in five quarters and the third consecutive quarterly rise. A reading above 50 indicates a generally positive outlook.
Global economic uncertainty remains the biggest business risk across most countries and sectors, but 44 per cent of the 91 companies that took part in the poll are now positive about their outlook, up from 30 per cent in the previous quarter.
Corporate sentiment on the mainland remained unchanged at its record low of 50, with companies worried about rising costs and global economic uncertainty.
Shane Oliver, chief economist at AMP Capital Investors in Sydney, said: "If you go back a year ago, there is a lot of concern about the global economy: a hard landing in China, a collapse in Europe, and double dip in the US.
"Some of those fears are still around, but they have certainly faded over the course of last year.
"So while companies in Asia still worry about China, it's about whether the growth is 7.5 per cent or 7.8. Some of the more extreme fears that were seen a year ago continue to fade, showing a gradual pick-up in company optimism."
Corporate sentiment in Japan showed solid improvement, with the index rising to the highest level in three years as aggressive monetary stimulus starts to revive its economy.
Of the 19 Japanese respondents, which included Daiichi Sankyo, Toshiba, Hitachi and Sharp, five were positive on their outlook and 14 were neutral.
In the previous survey, only one out of 22 participants was positive.
Australia and Indonesia saw big improvements in their outlook, and the two countries were among the most optimistic economies in Asia.
Australia continued to improve in the second quarter, driving the country's sentiment index to its highest level since the first quarter of 2012, although more participants were worried about the global economy.
Stephen Walters, chief economist at JP Morgan in Sydney, said: "From a general point of view, it has a lot to do with the currency, interest rates going down, and the offshore news has been better.
"Of the three, the currency is probably the main one. When the currency was over parity, it was quite painful for a lot of firms. So it follows when the currency is below parity they will feel a little bit less under pressure."
On the downside, business sentiment in India fell to its weakest level in more than three years, weighed down by worries about rising costs, the survey found, while Thailand's sentiment index dropped to a record low of 42 from 60.