Business sentiment at Asia's top companies dwindled in the third quarter to a near four-year low, with concern over China's economic health pushing the financial sector into pessimism.
The Thomson Reuters/INSEAD Asian Business Sentiment Index , representing the six-month outlook at 79 firms, was 60 for July-September versus 71 three months prior.
Sentiment was most upbeat among property developers and food companies, while shippers were the most gloomy with an index reading far below 50, which separates optimists from pessimists.
SHIPPING: SURVEY'S MOST PESSIMISTIC AT 25 IN Q3 VS 56 IN Q2 South Korea's Hyundai Heavy Industries Co Ltd and Singapore's Neptune Orient Lines Ltd made up half of the sector's respondents, where two had neutral outlooks and two negative. Three considered a slowing China as their chief risk. Two said sales were lower than three months prior, while one reported increased receivables.
AUTOS: MIXED FORTUNES LEAVE INDEX AT 33 VS 58 Korea's Kia Motors Corp was one of three respondents where two had a neutral outlook and one negative. Two feared slowdown in China, while the third saw more risk in weakening emerging-market currencies. One each reported higher, same and lower sales than three months earlier.
FINANCIALS: SECTOR'S LOWEST-EVER INDEX AT 44 VS 57 Of 18 firms - including India's HDFC Bank Ltd and Malaysia's Alliance Financial Group Bhd - a record seven had negative outlooks, with five fearing China's slowdown. Three also saw risk in weakening emerging currencies, while other concerns included asset quality and falling oil prices.
Four took on staff compared with three months prior, whereas two lost headcount. Five lost sales while four gained; and four reported increased receivables whereas two saw a decline.
RESOURCES: CHINA SLOWDOWN RENDERS INDEX NEUTRAL AT 50 VS 68 There were seven neutral outlooks from 13 respondents numbering Indonesia's PT Adaro Energy Tbk and Thailand's PTT Exploration and Production PCL ; the rest were split between positive and negative.
Four saw China's slowdown as their biggest risk, while three said weakening emerging currencies. Sales were higher at two firms and lower at three. Five reported a decline in receivables from three months prior, while receivables increased at one.
RETAIL: SENTIMENT SAME AS Q3 YEAR EARLIER AT 63 VS 75 PT Unilever Indonesia Tbk and Japan's Fast Retailing Co Ltd featured among four respondents, three of which had a neutral outlook while the fourth was more upbeat. Primary risks were divided between China's slowdown and falling emerging currencies. One company each reported increased staff and sales.
BUILDING: LEAST OPTIMISTIC IN A YEAR AT 70 VS 86 Last quarter's most optimistic sector saw a dip in sentiment as three of five building firms including India's DLF Ltd said China's slowdown was the biggest risk to their outlook, while one saw more risk in a U.S. rate hike. One company each reported a rise and fall in sales, while two took on more staff.
TECH: MOST OPTIMISTIC IN OVER A YEAR AT 73 VS 71 Sentiment rose for the fourth quarter in the tech sector, with eight expressing optimism among 15 respondents which included Japan's Canon Inc and Hitachi Ltd. Most flagged China's slowdown as their chief risk, with other areas of concern including demand uncertainty and more competition.
Five booked higher sales than three months prior, compared with three that lost sales. Four increased staffing and two reported a rise in receivables.
DRUGS: LOCAL, CHINA, GLOBAL UNCERTAINTY LEAVES INDEX AT 75 VS 75 Sentiment was unchanged in the drugs sector versus the prior quarter, with two firms each reporting neutral and positive outlooks. Two saw China's slowdown as the chief risk, while a third saw more risk in the domestic economy and a fourth in the global economy. One each booked a rise and fall in sales over the past three months, while all four maintained staffing.
FOOD: RISING INPUT COSTS BRING INDEX DOWN TO 79 VS 83 Of seven respondents including Japan's Asahi Group Holdings Ltd and Singapore's Olam International Ltd, four booked increased sales, with one taking on new staff, and one each reporting higher and lower receivables.
Two firms were wary of weakening emerging currencies, while two others flagged rising input costs.
PROPERTY: INCREASED SALES, STAFFING HELP INDEX TO 90 VS 77 The Philippines' Ayala Corp was among five respondents where four were positive about the coming six months, with the domestic economic and political situations cited as risks, along with local stock market conditions. Three reported increased sales and staff, while two flagged a rise in receivables.
AIRLINES: FIRST RESPONSE IN TWO YEARS PUTS INDEX AT 100 IN Q3 The sole airline respondent said sales had risen over the past three months, and that the biggest risk to its outlook over the next six months was weakening emerging currencies.
Note: Companies surveyed change from quarter to quarter- Reuters
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