Business sentiment among Asian firms rebounded in the third quarter as easing COVID-19 restrictions lifted sales, but lingering uncertainty over the pandemic thwarted a return to business as usual, a Thomson Reuters/INSEAD survey showed.
Asian firms’ outlook for the next six months tracked by the Thomson Reuters/INSEAD Asian Business Sentiment Index jumped to 53 in the third quarter from an 11-year low of 35 in the second, the survey of 103 companies across 11 Asia-Pacific countries showed.
It was also higher than 50 points, which indicates a positive outlook.
The survey comes as the easing of COVID-19 restrictions across Asia has reduced pressure on hard-hit economies, although the experience has varied across the region, with some countries still in recession and others, such as China, seeing a steady recovery.
More than two-thirds of the companies polled said that they saw the pandemic, or a fresh spike in COVID-19 cases, as a top risk.
About 14 percent said that a global recession was their biggest concern, while the rest flagged uncertainty over the upcoming US election in November and other risks.
“We’re recovering with a large dose of uncertainty,” said Antonio Fatas, an economics professor at global business school INSEAD in Singapore.
“If it was just because of Asia, I think the numbers would be more positive, but the reality is the world is not just Asia,” he said, pointing to greater uncertainty in Europe and the US.
The US has reported the greatest number of COVID-19 fatalities, while rising numbers in Europe are threatening to shut down parts of the continent again.
About 28 percent of companies in the third quarter were positive about their outlook, the survey showed, up sharply from 7.6 percent in the second quarter. About 60 percent of the firms polled said that they did not hire or lay off people this quarter, in contrast to the second quarter’s survey in which 63 percent said that they had cut jobs.
Companies polled included Australia-listed Oil Search Ltd, Indian motorcycle maker Hero MotoCorp and Japanese automaker Suzuki Motor Corp.
The survey was conducted between Aug. 31 and Monday last week.
While countries in Asia have had mixed success in containing the virus and its fallout on their economies, the Asian Development Bank expects output in the region to shrink for the first time in nearly six decades this year.
Some investors are shunning Asia’s riskier, high-yielding markets, despite the ample liquidity pumped into the financial system by central banks globally this year.
Satish Shankar, Asia-Pacific managing partner of business consultancy Bain & Co, said that many companies in the region would “need to fundamentally transform their business models” to survive.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
RSS