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REUTERS - Asia's top companies grew slightly more confident on their business outlook in the fourth quarter, reversing two consecutive quarters of declining confidence, according to the latest Thomson Reuters/INSEAD Asia Business Sentiment Survey, published on Wednesday.
The Thomson Reuters/INSEAD Asia Business Sentiment Index rose to 63 in December from 62 in September, when it saw a 7-point fall from the June survey. A reading above 50 indicates an overall positive outlook.
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The only carrier polled was negative in its outlook, making airlines the most pessimistic sector. Global economic uncertainty that hurt travel mostly to and from the euro zone has eaten into airlines' margins in recent quarters. High fuel prices and regulatory uncertainty remain concerns for Asia-Pacific carriers.
Four out of five automakers polled had a neutral outlook, while just one respondent had a positive outlook. Apart from economic uncertainty, the risk of foreign exchange volatility kept carmakers uncomfortable.
Sentiment for the building sector continued to deteriorate, with one respondent having a negative outlook, and the other a neutral view. One of the participants cited global economic uncertainty as a risk, while another participant said declining business confidence dented the outlook.
Financials were mostly neutral with all but one of the 18 respondents saying that global economic uncertainty may hurt their businesses going forward. One participant said rising costs was the biggest risk.
Food and drinks companies were the most bullish with an index reading of 77 for the quarter, an improvement on the last quarter's 73. Six out of the 11 companies polled had a positive outlook, while the rest were neutral. Higher costs were a concern, and commodity price volatility and changes in consumption trends also posed a risk. An overwhelming eight respondents said new orders were likely to increase.
Four of the nine drugmakers had a positive outlook for the fourth quarter and the rest were neutral, but the average index still fell for the second straight quarter. Drugmakers mostly cited global economic uncertainty as the biggest concern. Six respondents said they expected new orders to rise.
Property companies saw a fall in sentiment during the fourth quarter and were mostly neutral. These companies had seen significant improvement in business sentiment in the third quarter, when five of 10 surveyed responded with a positive view and the others with a neutral view. One company cited regulatory uncertainty as the biggest risk in the fourth quarter.
Half of the 14 resource firms were positive on their outlook, and most of them expected customer payments to remain stable. Three participants said rising costs was the biggest risk they faced, while most others worried about global economic health. Seven participants saw no change in new orders.
Retail companies showed strong improvements in sentiment in the fourth quarter, with four participants saying they were positive, while the rest were neutral. Rising costs and the health of the global economy were cited as the main risks to the outlook by retailers. One of the eight respondents, which included CP All (CPALL.BK), Fast Retailing (9983.T) and Galaxy Entertainment, said increased competition posed another challenge.
Sentiment for shipping companies improved, with none of the six companies polled being bearish. None of them said they were worried about rising costs or foreign exchange volatility, and most of them expected customer payments to remain the same. This was in contrast to the mixed responses from shipping companies in the previous quarter, when one company held a positive view, one neutral, and a third negative.
TECHNOLOGY: SENTIMENT ERODES FURTHER (INDEX AT 57 VS 58 IN Q3)
Technology firms were less optimistic. Ten of 14 companies polled were neutral about their outlook, three were positive, and one was negative. In the last survey, 13 of 18 participants were neutral and four were positive. The majority of the tech companies surveyed cited global economic uncertainty as their biggest business risk. Two said regulatory uncertainty was their biggest risk.
Note: ** Companies sampled for the survey may change from one quarter to the next.
Compiled by Anurag Kotoky in NEW DELHI; Editing by Alex Richardson