Business sentiment of Asian companies sank to an 11-year low in the second quarter, a Thomson Reuters/INSEAD survey found, with about two-thirds of the firms surveyed flagging a worsening COVID-19 pandemic as the biggest risk over the next six months.
While the pandemic’s initial impact was reflected in the March survey, confidence during this quarter fell by a third to 35, only the second time that the Thomson Reuters/INSEAD Asian Business Sentiment Index has slumped below 50 since the survey began in the second quarter of 2009.
A reading above 50 indicates a positive outlook.
Photo: AFP
The last time the index showed a reading below that was in its debut quarter, when it hit 45.
About 16 percent of the 93 companies surveyed also said that a deepening recession was a key risk for the next six months, with more than half expecting staffing levels and business volumes to decline.
“We ran this survey right at the edge when things were getting really bad,” Antonio Fatas, a Singapore-based economics professor at the global business school INSEAD, said of the survey conducted between May 29 and Friday last week.
“We can see this complete pessimism which is spread across sectors and countries in a way that we haven’t seen before,” he said.
Many nations are easing COVID-19-related lockdowns, but worries have mounted that another wave of infections could hurt economies that have been battered from weeks of curbs on travel and movement.
Coronavirus cases globally have crossed 8 million.
After weeks with almost no new COVID-19 infections, China recorded dozens of new cases this week, roiling fragile equity markets. South Korea also faces an uptick after early successful containment.
Companies from 11 Asia-Pacific nations responded to the Thomson Reuters/INSEAD survey.
Participants included Taiwanese contract manufacturer Wistron Corp (緯創), Thai hospitality group Minor International PCL (MINT), Japanese automaker Suzuki Motor Corp and Australia-listed Oil Search Ltd.
China, where COVID-19 was first detected, reported that industrial output quickened for a second straight month last month, but a weaker-than-expected gain suggested that the recovery remains fragile.
“It tells us that the recovery will take time and it won’t be a V-shaped recovery,” said Jeff Ng, senior treasury strategist at HL Bank Singapore (豐隆銀行).
Governments have rolled out stimulus measures to support ailing economies. Singapore and Hong Kong, among the most open economies in Asia, have backed sectors such as airlines that are bearing the brunt of travel restrictions.
The US Federal Reserve last week said that it would likely hold its benchmark interest rate near zero through 2022, signaling it expects a long road to recovery.
However, recessions in most major economies are still expected to be more severe this year than forecast, Reuters polls of more than 250 economists published late last month showed.
Chaiyapat Paitoon, chief strategy officer at Bangkok-based MINT — which operates brands such as Marriott and Four Seasons, and gets the bulk of its revenue from Europe — said that the company had taken several cost-saving measures to minimize the impact on its profits.
“MINT’s main priorities are to survive, stabilize and grow,” Paitoon said.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
UNCERTAINTY: Investors remain worried that trade negotiations with Washington could go poorly, given Trump’s inconsistency on tariffs in his second term, experts said The consumer confidence index this month fell for a ninth consecutive month to its lowest level in 13 months, as global trade uncertainties and tariff risks cloud Taiwan’s economic outlook, a survey released yesterday by National Central University found. The biggest decline came from the timing for stock investments, which plunged 11.82 points to 26.82, underscoring bleak investor confidence, it said. “Although the TAIEX reclaimed the 21,000-point mark after the US and China agreed to bury the hatchet for 90 days, investors remain worried that the situation would turn sour later,” said Dachrahn Wu (吳大任), director of the university’s Research Center for
RSS