Business sentiment damp in India, sunny in most of Asia

Tags: News

Carmakers and builders least optimistic

Business sentiment has taken a hit in India this quarter along with that of China and Australia amid persistent concerns over slow global economic recovery and rising costs. This is in contrast with significant improvement among Asia’s top companies on solid gains in the index for the Southeast Asian countries led by Japan, South Korea and the Philippines.

A Thomson Reuters/INSEAD survey showed the overall sentiment index for Asia’s top companies improved to 64 on a count of 100. A reading above 50 indicates an overall positive outlook.

In India, corporate sentiment dropped sharply this quarter compared with the one-year high of 82 last year, as only 30 per cent of the 20 respondents expressed optimism. As many as 65 per cent respondents had sounded optimistic in the last quarterly survey.

While no one was negative in their outlook, 14 of the 20 respondents said they were neutral, the survey said.

“Eleven respondents cited the murky outlook on global economy as the top risk to their businesses, while five considered rising costs as the biggest threat and some were worried about regulatory uncertainties. Despite the less upbeat outlook, 18 out of the 20 reported increased new orders and the other two said order levels remained the same. Nearly half of the respondents reported higher employment levels and 11 said the levels were the same,” the survey stated.

Thomson Reuters in association with global management and business school INSEAD conducted the poll between March 3 and 14, in which it surveyed more than 200 top companies in 11 Asian economies across sectors including property, financials and technology.

Of the 102 companies that responded, 65 per cent reported a neutral outlook, 31 per cent were positive and 3.92 per cent were negative in their outlook.

By sector, the retail industry showed a big improvement, with half of the eight respondents remaining neutral and the other half positive, taking the reading up 17 points to 75 from 58 in the fourth quarter of 2013.

Sentiments among Asian carmakers improved considerably, with all 11 respondents saying that they were neutral in their outlook. Despite the improvement, the survey showed that carmakers were the least optimistic companies in Asia along with builders, with most respondents citing global economic uncertainty as the biggest business risk even though 64 per cent of those surveyed reported an increase in new orders and sales.

Sentiment among Asian builders, which were the most bullish last quarter, turned neutral, ending two consecutive quarters of gains.

Ratings agency Standards & Poor’s on Wednesday said Indian companies’ credit profiles improved, as they had begun to divest stakes in businesses to clean up their balance sheets.

Earlier Fitch Ratings in a report said that global growth would accelerate in 2014 and 2015, driven by a recovery in major advanced economies (MAE), while it would remain broadly flat in emerging markets (EMs). Its latest forecasts on world GDP growth (weighted at market exchange rates) are 2.9 per cent for 2014 and 3.2 per cent for 2015, up from 2.4 per cent in 2013, unchanged from the December economic report.

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