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Asia business sentiment at two-year high in Q2: Survey

Corporate sentiment in Singapore remains upbeat, with two of six respondents showing a positive outlook and the rest remaining neutral, according to the ThomsonReuters/INSEAD survey released on Wednesday (June 18).

SINGAPORE: Business sentiment among Asia's top companies hit its highest level in more than two years in the second quarter, according to a ThomsonReuters/INSEAD survey released on Wednesday (June 18).

The ThomsonReuters/INSEAD Asia Business Sentiment Index jumped to 74 in the second quarter from 64 in the first, the highest reading since the start of 2012. A reading above 50 indicates an overall positive outlook.

The index surveyed 200 of the Asia-Pacific region's top companies in 11 economies across sectors from property, to financials and tech. Companies included Japanese clothes maker Fast Retailing, South Korea's Hyundai Heavy Industries and Australian construction materials firm James Hardie Industries. The poll, conducted by ThomsonReuters in association with INSEAD, a global management and business school, was compiled between June 2 and 13.

In Singapore, the sentiment index among companies remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral, Reuters reported. However, only three of six companies said new orders and sales increased this quarter compared with eight of nine respondents last quarter.

Leadership change gave India and Thailand sorely-needed shots in the arm, with the two key Asian markets powering a rise in the wider index with scores of 100 and 91, respectively, Reuters said.

Robust scores from China and Australia also helped lift the index with scores of 67 and 79, respectively, both up significantly from the previous quarter. Export-driven South Korea saw a steep drop to 50, from 67 in the first quarter, on weaker trade and consumer data, while Japan’s score edged down slightly to 56 from 59.

Corporate sentiment in Malaysia sank to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100. No companies from Indonesia responded to this quarter's survey.

Of the 124 companies who responded to the poll, none reported a negative outlook for the first time in the survey's history, Reuters said. It did state global economic worries, rising costs and other risks including political and regulatory uncertainty as the key business concerns.

"At the moment, stronger US growth, China providing some support to prevent collapse and the India story is still there. These are positives," said Mr Anthony Chan, senior economist for Asia at asset management firm AllianceBernstein.

However, the sentiment spike may be short-lived. India is due a "reality check" after its election boost, China's stimulus will create only a short-term lift, and there is still plenty hanging "in the balance" for Thailand after the military coup there in May, Mr Chan said.

RESOURCES UP, FINANCIALS DOWN

Region-wide, resources was the strongest sector with its reading of 80 marking a three-year high, Reuters reported. The property sector was just behind, climbing to 79 from 75 the previous quarter. Shipping, food and building sectors tied for third with readings of 75. In the building sector half of the companies reported a positive outlook, helping drive a steep rise from its score of 50 in the first quarter.

The weakest sectors were financials and retail. Financials dropped to 60 from 64 the previous quarter, while rising costs dragged retail down to 69 from 75.

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