Business sentiment among Asia’s top companies deteriorated in the third quarter, led by businesses in export engines such as China and South Korea, ending three consecutive quarters of improving sentiment, the latest Thomson Reuters/INSEAD Asia Business Sentiment survey showed.
The Thomson Reuters/INSEAD Asia Business Sentiment Index fell to 66 in the third quarter from 71 in the second quarter when it reached the highest level in more than a year.
An index reading above 50 indicates an overall positive outlook.
Some of the weakest readings came from north Asia’s economies of China, South Korea and Taiwan, and regional trading hub Singapore, all of which turned in readings of 50 — highlighting the impact of a stuttering global economy.
“Asian companies are still maintaining a relatively cautious outlook regarding their earnings growth prospects,” said Fan Cheuk Wan, chief investment officer for the Asia-Pacific region at Credit Suisse’s private banking and wealth management unit. “It could be partly related to the recent volatility across the emerging economies over the past three months.”
Asian equities, currencies and bonds have taken a beating over the last few months after the US Federal Reserve hinted it would halt its nearly five-year policy of flooding markets with cheap cash.
“This market volatility also inevitably has an impact on the perception and business sentiment of Asian corporates as they are still assessing the global growth outlook,” Fan said.
The poll conducted by Thomson Reuters News in association with INSEAD, a global business and management school, surveyed more than 100 executives in 11 Asia-Pacific countries across different sectors like auto, food and retail.
US CEOs less optimistic
US chief executives were less optimistic about the economy in the third quarter, with fewer expecting to increase sales or boost capital spending than in the preceding three months, a survey by the Business Roundtable showed.
The group’s CEO Economic Outlook Index fell to 79.1 in the third quarter from 84.3 in the second quarter and 81.0 in the first quarter. A reading above 50 indicates economic growth is expected. Seventy-one percent of CEOs said they expected their sales to grow over the next six months, down from the 78% in the June edition.