More CFOs optimistic about Singapore company prospects

By Lee Yen Nee

SINGAPAPORE--More local chief financial officers are optimistic about the prospects of their companies than last year, but they are less upbeat than their counterparts in Southeast Asia, according to a Bank of America Merrill Lynch (BoAML) survey.

The annual survey, which involved 600 CFOs and senior finance executives in 12 countries across Asia Pacific, showed that 71 per cent of CFOs in Singapore are forecasting a year-on-year growth in revenue this year and 65 per cent of them are expecting a rise in profits.

In the same survey last year, 64 per cent oxpected revenue to go up, while 54 per cent projected an increase in profits.

“It is consistent with the improvement in gross domestic product (GDP) growth. Last year’s growth was pretty much close to zero, and the Q2 flash was 3.7 per cent, with stronger financial services but also business services growth, and I think consumer trade services improved as well,” said BoAML’s Head of Emerging Asia Economics Chua Hak Bin.

However, the optimism of Singapore CFOs lagged behind their Southeast Asian counterparts, with CFOs in Indonesia, Thailand and the Philippines being more upbeat in their forecasts of corporate financial performance.

As a region, Southeast Asia is also more positive than the rest of Asia. Compared to Northeast Asian countries like Japan, Korea and Hong Kong, Southeast Asia is less vulnerable to the slowdown in China owing to strength of their domestic markets.

“Resilient domestic demand in Southeast Asia is key to explaining the optimism we are seeing,” said Mr Percy Batliwalla, Head of Treasury Sales for Asia Pacific at BoAML.

“In general, countries in Asia Pacific are experiencing a slowdown in exports, while countries in Southeast Asia are still enjoying strong economic growth relative to the rest of the world, fuelled in part by domestic consumer spending,” he added.

The survey also showed that CFOs in Southeast Asia think their companies will most likely use surplus cash for organic expansion instead of mergers and acquisitions.

This is BoAML’s second CFO survey in Asia Pacific, and the first time that Indonesia, Thailand, Philippines, Malaysia and Taiwan were included in the study that was conducted from April to May.