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S’pore companies more optimistic in Q2: Survey

SINGAPORE — Business sentiment among Singapore’s biggest companies reached a two-year high in the second quarter, showed a Thomson Reuters/INSEAD survey.

SINGAPORE — Business sentiment among Singapore’s biggest companies reached a two-year high in the second quarter, showed a Thomson Reuters/INSEAD survey.

Sentiment rose to 63 in the April to June quarter, up from 50 in the previous three months, according to the Thomson Reuters/INSEAD Asian Business Sentiment Index yesterday.

The Index represents the six-month outlook at 139 firms in the region. A reading of 50 separates the optimists from the pessimists.

The survey also showed that the reading for Asia-Pacific’s biggest companies in the overall index reached its highest in a year in the second quarter, helped by signs that China’s economy was slowly steadying.

The Index was 67 for April-June versus 65 three months prior, continuing a rebound from a four-year low of 58 in December.

Companies in the Philippines were the most upbeat, followed by those in India and China. Japan was the only economy with a sentiment subindex below 50.

In China, corporate sentiment is at its highest in almost a year, with respondents including China Jo-Jo Drugstores Inc producing a subindex of 75, up from 71 in the previous survey.

“What we are seeing today relative to the past two quarters is that Chinese risk has gone down. People are a little bit less worried about the possibility that something sudden will happen in China,” said Singapore-based economics professor Antonio Fatas at global business school INSEAD.

Rising corporate debt in China and its potential to handicap long-term growth was, however, the most-cited risk to companies’ outlooks, which also included volatile oil prices, central bank policies and terrorism.

Indonesia recorded the quarter’s biggest rebound in sentiment, with a 22-point jump in its subindex to 64, also helped by government spending on public works.

“We are very much affected by the slowdown of the global economy, especially from China,” said corporate secretary Agung Wiharto at state-controlled cement maker PT Semen Indonesia (Persero). “But we are confident things will be better in the second half, mainly because of the (Indonesian) government’s infrastructure spending.”

Sentiment also improved in the Philippines, which logged the highest sentiment subindex for the fourth consecutive quarter.

The business mood was weakest in Japan, Asia’s second-biggest economy, plummeting 31 points to a survey-low of 46, as companies worried about stagnating consumption.

Japanese firms also feared further appreciation in the yen, echoing concerns from policymakers, who have said yen strength could be exacerbated if Britain votes to leave the European Union.

By sector, companies engaged in retail and leisure were the most upbeat with a subindex rising to 82 from 77, as the majority of respondents reported an increase in business volume over the past three months.

Sentiment fell the most in the household, food and beverage sector, by 33 points to 67, while construction and engineering firms yielded the survey’s lowest subindex — falling to a neutral 50 from 70 three months prior. Both sectors mentioned the state of China’s economy among their biggest concerns.

Thomson Reuters and INSEAD polled companies from June 6 to 18.

The index started in 2009 with a record low of 45, but has largely hovered between 60 and 70 since hitting a record high of 80 at the beginning of 2011.

“The economy has been going sideways for the last few years,” said INSEAD’s Prof Fatas. “What we are seeing is what many people are calling the new mediocre state of the world economy. It is not going as low as 2009, but it is not rising to the level that we have seen in the past.” REUTERS

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