Business sentiment in Singapore at a year low

SINGAPORE - Business sentiment in Singapore has fallen even as that in other economies of South-east Asia stayed upbeat and among the highest in Asia.

In the fourth quarter of this year, Singapore's sentiment index, at 50, is at its lowest level since the fourth quarter of 2011, according to the latest Thomson Reuters/Insead Asia Business Sentiment Survey, which was published on wednesday.

A reading above 50 indicates an overall positive outlook, while one below points to pessimism.

Meanwhile, corporate sentiment in South-east Asia was mostly upbeat, with Malaysia, Indonesia and Philippines recording the highest scores in the poll at 100 points each.

All of the 15 respondents from the three countries were positive about their business outlook, showed the survey, which was compiled on Dec 3-14 and covered sectors such as cars, finance, property, resources and technology.

There were 96 responses out of 100 of Asia-Pacific's top companies in 11 economies.

"Indonesia will remain our favourite destination in Asia due to very attractive structural forces in play currently," said Juuso Mykkänen, chief executive of JOM Fund Management Ltd in Helsinki, which is running an investment company that have funds focused on investing in Asia.

"However, having said that, we have tactically increased weight in China in recent months as cyclical factors are on our side and valuations remain very compelling."

Within South-east Asia, Thai firms also grew more upbeat as the country's index, at 75 points, improved from the last quarter, with three out of six companies reporting positive sentiment and three neutral.

The results showed a stark contrast between companies in South-east Asia, a region of about 600 million people now benefiting from an increase in foreign investment and which showed some of the highest positive readings, and manufacturing- heavy North-east Asia, which is more susceptible to the global economic downturn and had some of the lowest index readings.

China, where exports support an estimated 200 million jobs, showed the most resilient rebound in sentiment in that region, but companies in other export- focused economies such as Japan, South Korea and Taiwan remained more cautious.

"External risk factors that may pose problems in Asia are European debt crises re-escalating and if US growth disappoints," said Mr Mykkänen."

"Asian own-risk factors are political ones that should be watched carefully. Territorial disputes should be also watched carefully."

Companies in Taiwan were the most negative in Asia with a 33 index reading, the lowest level since the third quarter of 2011.

It also compared with a reading of 40 in the third quarter.

Companies in Japan were the second-most negative, with a reading of 44 compared with a third-quarter reading of 48.

It was the lowest reading in a year, underscoring the slow pace of recovery in the world's third0largest economy.

Overall, business sentiment among Asia's top companies improved slightly in the fourth quarter, reversing two consecutive quarters of declines, the survey showed.

Out of the 96 companies that responded, 33.33 per cent reported a positive outlook for the next six months, an increase from the 32.99 per cent positive responses in the third quarter.

The number of negative responses declined from 9.28 per cent to 7.29 per cent while neutral responses rose to 59.38 per cent from 57.73 per cent.

The Thomson Reuters/Insead Asia Business Sentiment Index rose to 63 in the fourth quarter from 62 in the third quarter of 2012, and also higher compared to the 57 index reading in the fourth quarter of 2011, having peaked at 80 in the first quarter of 2011.

Besides some of the South-east Asian economies, India was another bright spark of optimism as respondents there grew significantly more upbeat and the country's sentiment index, at 100 points, reached its highest level since the first quarter of 2011, with all of the seven companies surveyed positive about their outlook.