Asia CFOs bullish on business

PHOTO: Asia CFOs bullish on business

SINGAPORE - Top number-crunchers from around the region are confident that their companies will end the year with fatter bottom lines despite slower growth in the key economies of China and the United States.

The findings came in a survey of 604 chief financial officers (CFOs) and senior finance executives in 12 markets across the region by Bank of America Merrill Lynch.

While it showed that the Asia region in general was optimistic, firms in South-east Asia were markedly more bullish than their counterparts in North Asia.

The poll found that 71 per cent of all respondents expect company revenue to be higher this year than last year. However, 62 per cent expect higher profits. Bank of America Merrill Lynch said the discrepancy is likely due to higher costs, which could eat into margins.

Commodity prices were cited by 37 per cent of respondents as being their top concern for the year while 22 per cent pointed to currency volatility.

Among the markets included in the survey, respondents from South-east Asia were the most bullish about their businesses.

In Indonesia, 90 per cent of CFOs polled expected higher revenues this year and 83 per cent anticipated increased profits.

In Thailand, 86 per cent forecast higher revenues and 69 per cent predicted higher profits.

The Philippines was also especially optimistic, with 81 per cent of the respondents expecting increased revenues and 78 per cent tipping higher profits.

Respondents in North Asia were the least optimistic.

In Taiwan, Japan and South Korea, between 54 per cent and 64 per cent of CFOs predicted higher revenues and between 50 per cent and 60 per cent forecast higher profits.

"Resilient domestic demand in South-east Asia is key to explaining the optimism we are seeing," said Mr Percy Batliwalla, head of treasury sales for Asia-Pacific at Bank of America Merrill Lynch.

"In general, countries in Asia-Pacific are experiencing a slowdown in exports, while countries in South-east Asia are still enjoying strong economic growth relative to the rest of the world, fuelled in part by domestic consumer spending."

CFOs in China had a positive outlook, with 79 per cent forecasting higher revenues and 66 per cent expecting higher profits.

Singapore's numbers were slightly lower, with 71 per cent of the CFOs tipping higher revenues and 65 per cent predicting higher profits.

Bank of America Merrill Lynch economist Chua Hak Bin said the sharp contrast between South-east Asian and North Asian outlooks was likely due to the demographic patterns in the markets.

While the number of young and middle-class consumers in South-east Asia is booming, North Asian populations are stagnating.

"As a result we've seen some shift in manufacturing production moving away from China to ASEAN and that trend is going to stay," he said.

yasminey@sph.com.sg


Get a copy of The Straits Times or go to straitstimes.com for more stories.