Asian business outlook positive, says survey
15 April 2008
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Asian business outlook positive, says survey
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| BANGKOK – A NEW survey released this week by a leading independent brokerage and investment group in Asia has found that business sentiment in Asia, including in Malaysia, through the first quarter of 2008 is generally positive despite pressure on margins and indications of a slowing in capital expenditure.The Asian Business Pulse survey of 425 Asian corporations in 11 markets carried out by CLSA Asia-Pacific Markets showed that 62 per cent of businesses volume growth in the first quarter of 2008 was stronger than 2007 and nearly half (47 per cent) of companies reported stronger export volume growth.
While 42 per cent of respondents described business conditions as better in 2008 than a year ago, a third (32 per cent) said conditions were tougher. CLSA head of thematic research, Mr Amar Gill, said the generally optimistic outlook of Asian businesses provided tentative signs of economic decoupling despite high financial-markets correlation. ‘The markets are correcting, but what we are seeing is a slower knock-on effect in Asia to the credit crisis in the United States. Demand from the growing middle class, as well as rising incomes for those already in the middle-class and continued investment in infrastructure is sustaining domestic demand even if there is some slowdown in trade with the developed economies,’ Mr Gill said. In Malaysia, some 81 per cent of respondents reported stronger volume growth (versus 62 per cent for the overall sample), while 46 percent reported stronger export growth, similar to the overall average, but a much lower proportion than the overall sample average compared to last year. In the survey, about 52 per cent of Malaysian respondents indicated better overall operating conditions and 43 per cent expected to grow headcount at a faster rate, while 47 per cent intended to increase capex, 42 per cent were keeping it at last year’s levels. CLSA said of the 1,000 questionnaires sent out, 34.4 per cent responded, with the highest rates (over 50 per cent) came from the Philippines, Taiwan and South Korea while the lowest response were from companies in Malaysia, Singapore and Japan (less 30 per cent), possibly indicating tougher conditions in those sectors/countries and hence less inclination to respond. Mr Gill said the need to contain domestic cost pressures appeared to be a far greater preoccupation for companies than the expected weakening in the global appetite for Asian goods. In terms of capital expenditure, only 52 per cent of companies indicated they would increase spending, which Gill attributed to the higher material and equipment costs while 61 per cent indicated input costs had risen in first quarter 2008 while only 53 per cent were able to raise average selling prices. ‘The squeeze in margin and caution over the medium-term growth outlook could explain the reluctance to commit to higher capital expenditure,’ he said. Companies in power and gas, automotive and materials were planning higher capital expenditure while those in petrochemicals, infrastructure and transport indicated they would cut capex. Japan, Hong Kong and Taiwan have proportionately more companies indicating tougher business conditions and also more indicating a margin squeeze, while Thailand, Indonesia and the Philippines appeared less affected by margins, with companies saying they will continue to increase capex. The survey also showed that two thirds of companies reported increases in total overheads for first quarter 2008. About 87 per cent of the respondents indicated that salaries will rise this year, and a similar number said they expect to increase headcount at or above last year’s rate. — BERNAMA Singapore Property – Buy, Sell, Rent and Invest |
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