* ThomsonReuters/INSEAD sentiment index rises to 65 from 63
* Southeast Asia outperforms thanks to domestic consumption
* Export engines China, Japan, Korea wary about global
By Anshuman Daga
SINGAPORE, March 20 (Reuters) - Asia's top companies,
especially those in the export engines of China, Japan and South
Korea, are wary about their business outlook, while Southeast
Asia is outperforming as a result of strong domestic
consumption, the latest quarterly Thomson Reuters/INSEAD Asia
Business Sentiment Survey showed.
Global economic uncertainty ranks as the chief business risk
across all sectors and all countries, as it has for the past
year and a half, and is mainly responsible for the cautious
sentiment despite a flood of global liquidity benefiting most
The Thomson Reuters/INSEAD Asia Business Sentiment Index
rose to 65 in March from 63 in December, when it edged
up by 1 point from the September survey. A reading above 50
indicates an overall positive outlook.
Business sentiment in Southeast Asia's $1.5 trillion economy
was mostly optimistic, thanks to government-driven investment in
infrastructure and robust domestic spending. Malaysia and the
Philippines were the most positive with readings of 100 each.
This was the second consecutive quarter of maximum scores for
"I think the good news so far this year is just kind of
consistency. We have continued to see modest upgrades to GDP
forecasts for Malaysia, Philippines and to some extent,
Indonesia," said Gary Dugan, chief investment officer for Asia
and the Middle East at private bank Coutts.
"People continue to enjoy the same old thing, which is
growth that surprises forecasts, companies therefore delivering
good earnings numbers which beat expectations," said Dugan.
The availability of adequate funding is driving growth in
"Domestic consumption across most ASEAN countries has been
very robust and I think that's the key reason why the domestic
businesses are confident," said Hozefa Topiwalla, ASEAN equity
strategist at Morgan Stanley.
Unlike in previous cycles when funding was a big constraint,
there is no impact on funding for corporates, Topiwalla said.
EXPORT-RELIANT ECONOMIES CAUTIOUS
Companies in China, Japan and South Korea were the least
positive, with index readings of 50. The result from China was a
steep drop from the 64 recorded in the fourth quarter of 2012.
The troubles facing major consumers such as Europe and the
United States have hit export-reliant economies, with South
Korean exports falling sharply last month.
Across the Asia-Pacific region, rising costs were the second
greatest business risk, ahead of regulatory uncertainty,
political instability and foreign exchange volatility.
The index for financials rose to the highest in a year, with
four firms reporting a positive outlook and none a negative
view. Sentiment among property companies brightened, and firms
in the resources sector were also optimistic.
The survey polled 100 executives in 11 Asia-Pacific
economies from companies including Hyundai Heavy Industries
, Toshiba Corp and PT Bumi Resources
. Of the 93 that replied, nearly 69 percent reported a
neutral outlook, about 30 percent were positive and 1 percent
reported a negative outlook.
The poll was conducted by Thomson Reuters in association
with INSEAD, a global management and business school, between
March 4 and March 15.
INDIA LOSES STEAM, JAPAN IMPROVES
Citing rising costs as the biggest hurdle, companies in
India tempered their outlook to pull the index down to 80 from
December's level of 100.
The survey showed that business sentiment in Japan was
slightly better, but the global economic environment, currency
fluctuations and rising costs remained major obstacles to any
strong rebound from the 2012 low struck in December.
Broken down by sector, food and beverage companies were the
most bullish with an index reading of 88 for the quarter, its
highest mark since this survey started in 2009.