Business sentiment among Asia’s top companies improved dramatically in the first quarter following three straight quarterly declines, buoyed by signs of recovery in the United States and some steadying of Europe’s debt crisis, according to a Reuters report.
But concerns persist over rising costs and the state of the global economy. The quarterly Thomson Reuters-INSEAD Asia Business Sentiment Index jumped to 74 from 57 in the fourth quarter of 2011. The index was the highest since the first quarter of last year. A reading above 50 indicates an overall positive outlook.
More than half the companies that responded to the survey said their outlook for the next six months was positive compared with fewer than a third in the fourth quarter.
The index was compiled between March 12-19 from a poll of more than 100 senior executives at Asia’s top companies representing industries from autos and banks to technology, resources and property. It was the first poll conducted by Thomson Reuters in association with INSEAD, a global management and business school in Singapore and France.
The biggest risks to the business outlook across Asia are rising costs and broad economic uncertainty, the poll showed. Almost all the dozen financial companies polled said global economic uncertainty was the biggest risk, a concern echoed by half the 16 technology companies surveyed, which also cited worries about rising costs and foreign exchange volatility.
A range of other concerns were expressed such as weak consumer demand in Australia, regulatory uncertainty in India and a persistently strong yen in Japan. David de Garis, senior economist at National Australia Bank in Melbourne, said stock markets and credit markets were recovering after the European Central Bank “has thrown a lot of money at the liquidity crisis in Europe”.
“Capital markets have opened up again, people have been able to come back to the market for bank financing, so that’s been a big plus, particularly to financial institutions,” he said, noting Europe’s debt crisis was not necessarily resolved. “It would be pretty brave to be making that claim.”
