Asia's top companies are less upbeat on their business outlook than in the first quarter, with mounting concern over the euro zone crisis and a slowdown in China's growth, according to the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey, published on Wednesday.
The Thomson Reuters/INSEAD Asia Business Sentiment Index (RACSI) slid to 69 in June from 74 in March, when it saw a dramatic 14-point jump from the December survey. A reading above 50 indicates an overall positive outlook.
AIRLINES: SLIGHTLY MORE POSITIVE
Carriers were slightly more upbeat about their outlook after jet fuel prices trended downwards recently, with three of five responding positively and two neutral in this quarter, compared with one positive and one negative in the previous three months. Rising fuel costs remained the top concern, however, with two airlines citing them as the main business risk.
AUTOS: IN NEUTRAL
A majority of the auto companies surveyed - six of the nine - had a neutral view, while three were positive. This compares with three neutral and two positive in the previous quarter. Most were worried about the impact of slowing economic growth on car sales. Companies responding included Indonesia's Astra International.
BUILDING: LESS OPTIMISTIC
Sentiment in the building sector has dipped, with two of the five companies responding positively, two holding a neutral view and one negative. In the previous survey, three companies were positive and one negative. Rising costs and the global economic uncertainty, which affect profitability and construction demand, remained the major concerns for builders. Companies surveyed included Thailand's Siam Cement.
FINANCIALS: LESS BULLISH
Banks and insurers were less bullish on their outlook, with 16 of 30 surveyed being neutral and 12 responding positively this quarter, compared with seven positive and six neutral in the previous survey.
Indonesian banks were the most optimistic, with all five surveyed giving positive replies. Indonesia was followed by the Philippines, with two banks surveyed there also giving a positive outlook. The global economy was the dominant concern, with 25 financial companies citing it as the key risk.
FOOD: MORE POSITIVE
Food and drinks companies were turning more bullish about their outlook, with 10 of 16 responding positively and the rest neutral. This was an improvement over the last quarter when two were positive and two neutral.
Companies in the Philippines were the most upbeat, with all five surveyed reporting a positive outlook, followed by Indonesia, with all three companies polled being positive about their prospects. Despite the improving sentiment, six cited rising costs as a key risk, while five were concerned about the global economy. Companies surveyed included JG Summit Holdings and Astra Agro Lestari.
DRUGS: MORE POSITIVE
Four of six surveyed responded positively, led by Indonesian companies, marking an uptick from the previous quarter when three of four firms were neutral. The global economy was the main concern for two of the companies surveyed, while two others were worried about rising costs. Companies responding included Japan's Daiichi Sankyo Co Ltd and Takeda Pharmaceutical Co Ltd.
PROPERTY: NEUTRAL
Sentiment in the property sector was largely in line with the last quarter, with seven of 10 firms surveyed holding a neutral view, compared with three of five being neutral previously. Two Chinese developers surveyed had a neutral outlook after a sharper-than-expected slowdown in the world's second-largest economy and government cooling measures dragged property sales.
RESOURCES: LESS POSITIVE
The mood among the 44 resources firms surveyed was slightly worse, with 20 companies reporting a positive outlook, 20 neutral and four negative. This compares with six positive, four neutral and one negative in the previous quarter. More than half the companies were worried about slowing economic growth, which could hit demand for commodities such as coal, iron ore and palm oil. Others cited concerns such as government policies, political stability and commodity prices. Companies responding included Coal India Ltd and Sinopec Corp.
RETAIL: MORE BULLISH
Retail companies turned more upbeat, with seven of 12 surveyed reporting a positive outlook, up from three of seven firms in the previous quarter. More than half the companies were concerned about the global economy, while rising costs were the second-biggest worry. Companies responding included the Philippines' SM Investments Corp.
SHIPPING: LESS POSITIVE
Shipping companies were less optimistic, with five of eight surveyed holding a neutral view, two positive and one negative, compared with two positive and one neutral in the previous quarter. Four of the five South Korean shipping firms were neutral about their prospects. All eight companies surveyed cited the global economy as the key risk as reduced trade pushes down shipping rates. Respondents included Daewoo Shipbuilding & Marine Engineering Co Ltd, Hyundai Heavy Industries Co Ltd and STX Offshore & Shipbuilding Co.
TECHNOLOGY: LESS POSITIVE
Technology firms were less bullish this quarter, with 13 of 32 companies polled saying they were positive about their outlook, 18 neutral and one negative, compared with nine positive and seven neutral in the previous survey. Nine of 10 Japanese tech companies surveyed were neutral, and one positive. Most firms were concerned about slowing demand for electronic components, TVs, mobiles and services, as well as other technology products. Several also flagged regulatory risks and increasing competition. Companies responding included Canon Inc, Hitachi Ltd, Sharp Corp, Toshiba Corp and Softbank Corp.
