REUTERS - Optimism for the coming six months among Asia-Pacific's biggest firms picked up in the first quarter of 2016, tempered mainly by concerns about declining demand in China and excessive currency volatility, a Thomson Reuters/INSEAD survey showed.
The poll of 97 companies yielded a Thomson Reuters/INSEAD Asian Business Sentiment Index of 65 for January-March, from 58 three months prior.
Firms in the Philippines were most optimistic for the third consecutive quarter, with nine of 11 economies logging improved sentiment. Just Malaysia, Taiwan and Indonesia suffered indexes below the midway mark of 50, indicating pessimistic outlooks.
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Business sentiment index over the years | Click http://reut.rs/1ZqGFp0
INDIA: SENTIMENT RECOVERS BUOYANCY AT 83 VS 71
Sentiment in India ticked upward after two quarters of decline, but remained off the near-universal positivism of a year prior. This time last year, faith in the then 10-month-old government had just begun to taper.
Six respondents had a bright near term outlook, with the remaining three neutral. Major concerns included weak demand both at home and in neighbouring China - whose economic growth India outpaced in the previous quarter. Three companies added business, versus two that lost. Four reported improved asset quality.
PHILIPPINES: TOP AGAIN WITH INDEX AT 85 IN '16Q1 VS 77 '15Q4
Optimism among Asia-Pacific firms toward business conditions in the coming half-year was highest in the Philippines for the third straight quarter, spurred on by one of the fastest-growing economies in the region.
Eight firms rated their six-month outlook as positive, with one neutral and one negative. They said the top risks to their outlooks were increased competition and slowing Chinese demand. Five won more business versus three months prior, three took on staff and four reported improvement in the quality of assets.
JAPAN: HIGHEST-EVER AT 77 VS 73
Japanese companies logged record optimism in a quarter which saw the central bank impose fees on certain deposits for the first time, to prevent financial market volatility hurting business confidence and impacting efforts to end deflation.
Six firms were positive toward the next six months with five neutral. Excessive foreign exchange fluctuation was the biggest concern, with Chinese demand a close second. Business volume, staffing and asset quality were largely unchanged.
CHINA: ECONOMIC IMPROVEMENT BOOSTS SENTIMENT TO 71 VS 50
Sentiment rebounded sharply among Chinese firms, polled shortly after the government announced its five-year development plan, with four of seven positive about the coming half-year and only one pessimistic.
Five firms booked more business over the three months prior, and just one firm saw declining domestic demand as a risk over the next six months - reflecting views of government officials that there are signs of economic improvement. Three firms increased staffing over the quarter and three booked improved asset quality.
SOUTH KOREA: WEAK EXPORTS PULL OPTIMISM DOWN TO 70 VS 75
Two positive and three neutral views of the next six months gave South Korea an overall optimistic index. However, it was one of two indexes that declined from the previous survey.
Slowing demand in top trade partner China was the biggest concern for firms in a country where exports dropped during polling in March, extending a slump that began last year.
Two firms booked increased business volume, two raised staffing and two saw improvement in asset quality.
THAILAND: EXPORTS DROP BUT SENTIMENT ROBUST AT 67 VS 58
Government spending promises this year may have helped Thai optimism improve after two quarters of decline, with six firms positive for the next half-year, eight neutral and one negative.
A drop in Chinese demand topped the risk list for an economy dependent on exports - which have fallen every month for over a year - followed by low oil prices. Eight firms booked increased business volume and asset quality, while five took on staff.
AUSTRALIA: ECONOMY PICKS UP BUT FIRMS UNMOVED AT 63 VS 61
Change in sentiment this quarter was mildest in Australia where, before polling, data put fourth-quarter economic growth as the fastest in almost two years. Three firms were optimistic toward the coming half-year, four were neutral and one negative.
Among chief outlook risks were tighter bank credit, a fall in share prices and regulatory change. Four firms reported a rise in business volume and asset quality versus one each that booked a decline. One added headcount whereas three cut staff.
SINGAPORE: SURVEY'S BIGGEST JUMP IN SENTIMENT AT 50 VS 21
Business sentiment in Singapore turned neutral after two deeply pessimistic quarters. One firm reported a positive outlook, one was negative and three were neutral after the government said fourth-quarter economic growth was quicker than expected, but that trade would grow at a slower pace than initially estimated.
One firm flagged tighter bank credit as the top outlook risk, while one said declining Chinese demand and another pointed to excessive currency volatility. One reported a decline in business volume, another saw deterioration in asset quality and two companies reduced headcount.
MALAYSIA: LOW OIL PRICES KEEP INDEX SUBDUED AT 45 VS 41
Sentiment was largely pessimistic for the third consecutive quarter in Malaysia, where economic growth is being dragged down by historically low oil prices and a currency that has weakened significantly over the past year.
Three firms rated their six-month outlook as negative versus two positive and six neutral. Oil prices topped the risk list along with excessive foreign exchange volatility. Two companies each reported a fall in business and asset quality, compared with three each that reported increases. Four firms lost staff.
TAIWAN: GLOBAL GROWTH CONCERN KEEPS MOOD DOWN AT 44 VS 38
In Taiwan - where the government has already cut its 2016 economic growth forecast twice - overall sentiment remained pessimistic for a second consecutive quarter, with eight firms rating their six-month outlook as neutral while one was negative.
Firms cited global economic slowdown, weakening demand and regulatory change among the biggest risks to their outlooks. Two firms lost business over the past three months, whereas three gained. Asset quality and staffing were largely unchanged.
INDONESIA: SURVEY'S STEEPEST FALL IN SENTIMENT TO 42 VS 64
During polling, the World Bank cut its view of Indonesia's 2016 economic growth to 5.1 percent whereas the International Monetary Fund raised its assessment to 4.9 percent - reflecting the to-ing and-fro-ing of business sentiment over the past year.
In the latest reading, one positive, three neutral and two negative views of the next six months sent Indonesia's sentiment index into pessimism. Two firms said the top risk was excessive currency volatility, while one feared lower interest rates.
One firm reported lost business volume, whereas three gained. One said asset quality had improved while one said asset quality had deteriorated, and two companies hired whereas another two lost staff.
Note: Companies surveyed change from quarter to quarter
(Writing by Aaradhana Ramesh; Editing by Christopher Cushing)