* Asia Corporate Sentiment Index at 69 in Q3 vs 78 in Q2
* Reuters poll of 100 major Asian firms between Sept 7-13
* Japan, Australia, Korea cautious on 6-mth business
* India, China, Southeast Asia upbeat
* Tech sector optimism fades; resource companies bullish
(Updates to add link to Reuters Insider segment)
By James Topham and Alison Leung
TOKYO/HONG KONG, Sept 15 Business sentiment at
Asia's top companies fell in the third quarter, marking the
first decline in six quarters, as growing concerns about the
global economic outlook dented optimism.
The Reuters Asia Corporate Sentiment Index RACSI dropped
to 69 in the quarter from 78 in the second quarter, which was
the highest since Reuters began collecting data in the June
Still, strong economic growth within Asia continues to
underpin sentiment, and the index remains well above the 50
mark that divides a positive outlook from a negative one.
A shift towards a slightly more cautious outlook since June
comes against a backdrop of mixed U.S. economic data that has
raised fears about a double-dip recession. [ID:nSGE68C0JK]
In addition, European countries are set to cut spending,
China is taking steps to cool its economy and Japan has warned
of risks to its economy from a strong yen and slowing overseas
"The increased concern about a double-dip in the West,
mainly the United States, coupled with a concern about how far
Chinese policy makers will go with tightening measures are
weighing on sentiment," said Kirby Daley, a senior strategist
at Hong Kong brokerage Newedge Group.
For a PDF of the survey: r.reuters.com/pyq63p
Graphic on the Reuters index vs the MSCI pan-Asia index:
Graphic on the breakdown of Asia corporate sentiment:
For Reuters Insider interview on Asia corporate sentiment:
StarMine comparative data on Asian stock markets:
PDF on Asia Corporate Snapshot for September:
The Reuters Asia Corporate Sentiment Index was compiled from a
survey of top company executives between Sept 7-13. Reuters
polled 100 major firms in the following industries: airlines,
autos, building, drugs, financial, food, property, resources,
retail, shipping and technology.
Of the 59 companies in the survey, 24 view the six-month
outlook for their business as 'positive' and five are 'very
positive'. Twenty four firms are 'neutral', while six have a
'negative' outlook -- double the number in June.
The shift to a more cautious outlook was most marked in the
tech sector, where respondents included India's Infosys
Technologies (INFY.BO), Japan's Canon (7751.T) and Taiwan's
Almost three quarters of the technology firms surveyed
viewed the business outlook as 'neutral' compared with about a
third in the June poll. Just three of the 13 technology
companies respondents were 'positive'.
Infosys and Wipro Ltd (WIPR.BO) (WIT.N), India's No.2 and
No.3 software services exporters, said on Monday that customers
remain cautious about technology spending. [ID:nLDE68C1LW]
Half the firms surveyed from the financial sector said the
six-month outlook for their business was 'positive' to 'very
positive', down slightly from the previous quarter.
Japanese firms, which were slightly more cautious than
their Asian peers in the second quarter survey, remained so --
11 of the 18 companies said the six-month outlook for their
business was 'neutral', while four said it was 'negative'.
Companies in the poll included Mitsubishi UFJ Financial
Group (8306.T) and Japan's No. 1 drugmaker Takeda
"Japan is an outlier in Asia, as it has had a much more
subdued recovery from the trough in early 2009, and it still
has a lot of excess capacity, and is suffering from deflation,"
said Richard Jerram, head of economics at Macquarie Securities
in Tokyo. "Policy inertia and political turmoil does not help
either. As a result, it is unsurprising that Japanese firms are
much more cautious than elsewhere."
In Australia, more than half the companies surveyed were
'neutral' about the business outlook, while in South Korea two
of the five companies polled held a 'negative' outlook, with
one shifting from a 'positive' stance in June.
CHINA GOING STRONG
Corporates in Southeast Asia, China and India remained the
most upbeat in Asia. India, Malaysia and the Philippines were
the only countries where some companies were 'very positive'.
Of the eight Chinese companies in the survey,
three-quarters were 'positive' about the outlook. That
sentiment appears to be backed up by the latest economic
numbers out of Beijing.
Chinese factories ramped up production in August and money
growth easily topped expectations, showing that the economy
remained buoyant despite government efforts to clamp down on
bank lending and property speculation. [ID:nTOE68A00H]
"The Chinese economy still continues to grow at a
relatively fast pace," said Ben Kwong, chief operating officer
at KGI Asia in Hong Kong.
"Even though it's started to slow, the growth rate is high
compared to most Western economies. The emerging market is
still a bright spot for investors."
Expectations of strong demand from China may help explain
why most resource firms in Asia are optimistic.
Of the six resource firms in the poll, which includes
mining giant Rio Tinto (RIO.AX), four viewed the six-month
outlook as 'positive', while one was neutral and the other
negative. In the second quarter poll, of the five resource
firms that responded, two were 'positive'.
"The Chinese situation seems to be a freight train economy
running along. They'll be needing more and more commodities as
they go forward," said James Wilson, resources analyst at
Australian stockbroker DJ Carmichael.
"At least in the short to medium term you'd have to be
somewhat bullish on the outlook for commodities."
Airlines were also among the more upbeat companies in the
region, with all three airlines in the survey viewing the
six-month outlook for their business as 'positive' -- one of
those shifted from a 'neutral' view in the June poll.
Aviation fell into a nosedive after the global financial
crisis but airlines are growing more confident as economic
recovery takes hold, with expectations of profitability rising.
"General passenger demand is stronger than other regions.
Premium passengers are coming back and that's why premier
airlines, such as Cathay Pacific (0293.HK), are outperforming
peers," said Jay JH Ryu an analyst at Mirae Asset Securities.
"The third quarter is a typical strong season for
passengers, so general earnings and environment should be
better than the first half, but cargo business could be a bit
(Additional reporting by Joseph Chaney in HONG KONG; Writing
by Dhara Ranasinghe; Editing by Lincoln Feast and Jean Yoon)