(Adds details on sectors, economies, analyst comments)
* Sentiment index rises to 64 in Q1 from 62 in Q4
* Global economic uncertainty continues to remain biggest
* Philippines most upbeat, Japan, S.Korea, Singapore also up
* Sentiment in China, India, Australia turns weaker
* Autos, retail, resources recover, building sentiment
By Miyoung Kim
SEOUL, March 19 Business sentiment among Asia's
top companies edged up in the first quarter, as solid
improvement in the Philippines and South Korea outweighed
weakness in China, India and Australia amid persistent concerns
over the global economy, a ThomsonReuters/INSEAD survey showed.
The ThomsonReuters/INSEAD Asia Business Sentiment Index
snapped two consecutive quarterly declines and rose to
64 in the first quarter of this year from 62 in the fourth
quarter of 2013. A reading above 50 indicates an overall
Uncertainty about the global economic outlook and rising
costs remained the biggest risk factors for the region's firms,
according to the survey, which also found sentiment in the
autos, retail and resource sectors improved, while confidence
among companies in the building sector tumbled.
Solid gains in Japan, South Korea and regional trading hub
Singapore supported the index, but weaker sentiment from China,
Australia and India underscored fragile prospects for an
improvement in global demand.
China's exports unexpectedly dropped 18 percent in February,
fueling investor concerns over cooling growth in the world's
Chinese premier Li Keqiang said the economy faced "severe
challenges" in 2014 and hinted Beijing would tolerate a slower
expansion while it pushes through reforms aimed at providing
more sustainable growth in the future.
"The sentiment (in China) is not great...There isn't a lot
of transparency on what happens next," said Stephen Green, head
of China research at Standard Chartered.
The poll, conducted by ThomsonReuters in association with
INSEAD, a global management and business school, was compiled
between March 3-14.
The index surveyed more than 200 of Asia's top companies in
11 economies across sectors including property, financials and
tech. Companies participating in the survey included Hyundai
Heavy Industries, Fast Retailing Co Ltd and
International Container Terminal Services (ICTSI).
Of the 102 Asian companies that responded, 65 percent
reported a neutral outlook, 31 percent were positive and 3.92
percent were negative in their prospects.
PHILIPPINES MOST BULLISH
Corporate sentiment in the Philippines rebounded the most in
the first quarter of 2014, with all 12 respondents reporting
positive sentiment that pushed the sentiment index to 100, even
as the majority of them were concerned about the uncertain
Most companies in the country reported higher new orders and
employment levels as massive rebuilding efforts, including the
government's $3.1 billion spending plan after a devastating
typhoon in early November, are set to help sustain strong
economic growth this year.
Overall sentiment in Southeast Asia's $15 trillion economy
was mostly positive, with Thailand being the only country in
negative territory due to the lingering political turmoil.
In export-reliant north Asia, Japan and South Korea showed a
solid recovery as they reported increased orders. Yet, 14 out of
17 respondents in Japan were neutral on business sentiment as
they brace for a hike in consumption tax from April, which may
ease a recent recovery in domestic consumption.
AUTOS, RETAILS, RESOURCES UP, BUILDING DOWN
By sector, the retail industry showed a big improvement,
with half of the eight respondents neutral and the other half
positive, taking the reading up 17 points to 75 from 58 in the
fourth quarter of 2013.
In a sign of growing confidence in the sector, Asia's top
apparel retailer, Japan's Fast Retailing Co is among
global retailers expanding aggressively in Asia, with plans to
boost sales in greater China by more than 30 percent this year.
"A recovering economy has contributed to the rosier
performance of retailing in developed countries in Asia," said
Euromonitor International analyst Honey Lim.
"In addition, the completion of new and revamped malls in
the city centre and suburbs has supported value growth of
retailing in Singapore in 2014. High rental costs, particularly
in Singapore and Hong Kong, also drove prices upwards as
retailers pass increasing costs to end-consumers."
Sentiment among Asian automakers also improved considerably,
with all 11 respondents saying they were neutral on the outlook.
The sector reported a reading of 50 in the first quarter
compared to the 33 score it turned in the fourth quarter of
Despite the improvement, the survey showed that automakers
were the least optimistic companies in Asia along with builders,
with most respondents citing global economic uncertainty as the
biggest business risk even though 64 percent of those surveyed
reporting an increase in new orders and sales.
Sentiment among Asian builders, which were the most bullish
last quarter, turned neutral, ending two consecutive quarters of
(Additional reporting by Ran Kim in TOKYO and Rujun Shen in
SINGAPORE; Editing by Miral Fahmy)