Asia’s CFOs confident about 2012
Chief financial officers in Asia, excluding those in Japan, are positive about the regional economy but cautious on their view of the world economy.
The inaugural Bank of America Merrill Lynch (BAML) CFO Outlook Asia report highlighted responses from 465 CFOs across seven countries and territories in Asia – Australia, China, India, Hong Kong, Japan, Korea and Singapore.
From the interviews, which were conducted in the fourth quarter of 2011, it is clear that CFOs in Asia believe that China’s “economic dragon” will buffer them from economic threats in Europe and the US.
China’s economic dragon fires up regional growth
CFOs in China were most positive about the state of their economy with a score of 7.5 out of 10, while CFOs in Japan had a less favorable view of their domestic economy at 4.1 than of the global economy.
Their counterparts running corporations elsewhere in Asia were less optimistic about the future, with only 32 per cent predicting higher GDP growth in their own countries in 2012, while 27 per cent believe GDP growth will decelerate.
Japanese CFOs’ pessimism peaked with 44 per cent predicting their country’s GDP growth will contract in the coming year, while 75 per cent of their counterparts in India forecast an expansion in GDP growth for that country. This compares with only 25 per cent of China CFOs forecasting accelerating GDP growth in that economy.
“The region continues to experience strong economic fundamentals and remains a relatively bright spot within the global economy,” said Matthew Koder, BAML’s head of Asia Pacific global corporate and investment banking. “But global macro issues such as the European debt crisis and the state of the U.S. economy have contributed to the uncertainty in this part of the world and clouded the outlook for growth, showing that Asia is not immune to global forces.”
In addition to the uncertainty surrounding the situations in Europe and the US, CFOs in Asia were most concerned about oil prices, the impact of an economic slowdown in China and in Hong Kong, Singapore, Korea and China, asset bubbles in property prices.
Credit crunch? Not in Asia
Reflecting the relatively optimistic mood, 37 per cent of companies in Asia expect borrowing needs in 2012 to increase with the same percentage forecasting that their borrowing needs will remain the same.
The majority of CFOs have not experienced a credit crunch in Asia with 45 per cent having seen credit availability remain at the same level as the previous year. Thirty-nine percent even say that credit availability had somewhat increased or significantly increased (27 per cent and 12 per cent respectively).
Given the expectations on availability of credit and the revenue forecasts, it is no surprise that 39 per cent of Asia CFOs expect to increase capital expenditure in 2012, while a further 38 per cent intend to keep capital expenditure (capex) at 2011 levels.
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- Asian Markets
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- AB+F Online, bkellerman@financialpublications.com.au
- Article Posted:
- February 22, 2012
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