#Highlights* ThomsonReuters/INSEAD Q3 Asian Business Sentiment Survey - by economy

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(Sept 17): Business sentiment among Asia's top companies fell sharply in the third quarter as last quarter's positive signs from China and Singapore slipped on an uncertain global economic outlook and rising costs, outweighing continued optimism in India, a ThomsonReuters/INSEAD survey showed.

The ThomsonReuters/INSEAD Asia Business Sentiment Index fell to 66 in the third quarter of this year from 74 in the second quarter, its steepest decline in three years. A reading above 50 indicates an overall positive outlook.

AUSTRALIA: MARGINALLY WEAKER (INDEX AT 75 VS 79 IN Q2)

Business confidence among companies in Australia remained positive in the third quarter even as half the participants continued to worry about the global economy.

Of the 12 respondents, which included James Hardie and Oil Search, six companies remained positive and the rest remained neutral.

Employment levels and new orders have largely remained the same in the third quarter. Three companies said their new orders increased while two said they hired more people.

CHINA: WEAKER (INDEX AT 50 VS 67 IN Q2)

Sentiment in China declined sharply as all 11 companies polled reported a neutral outlook and only three respondents reported an increase in new orders and sales in the third quarter.

Seven of the 11 participants said global economic uncertainty was the top risk, a worry shared by almost 50 percent of 120 companies surveyed in the third quarter. A handful of Chinese firms are concerned about rising costs.

China's factory output grew at the weakest pace in nearly six years in August. This has led to a fear of a sharp slowdown in the world's second-largest economy unless Beijing takes fresh stimulus measures.

INDIA: STEADY SENTIMENT (INDEX AT 100 VS 100 IN Q2)

Indian companies were the most positive for the second consecutive quarter with all 15 respondents reporting a positive outlook and 14 of them reporting an increase in new orders and sales.

Rising costs were a major concern for seven companies and three expressed concerns for the global economy. Prime Minister Modi's labour reforms continue to revive the job market with a steady response of increases in employment levels from six respondents.

JAPAN: UP SLIGHTLY (INDEX AT 59 VS 56 IN Q2)

Business sentiment in Japan strengthened marginally to 59 in the third quarter with an almost equally divided opinion on the global economic environment, rising costs and other risks.

Of the 17 respondents, which included Daiichi Sankyo Co Ltd , Canon Inc, Seven & I Holdings and Fast Retailing, 14 were neutral on the outlook and three positive, similar to the previous survey.

New orders and sales and employment levels remained similar to the last quarter.

SOUTH KOREA: STEADY (INDEX AT 50 VS 50 IN Q2)

Global economic worries continued to weigh on the business sentiment of South Korean companies with the economy's index maintaining the least positive reading of 50 for the second consecutive quarter.

All 16 respondents said their outlook was neutral with the majority concerned about the global economy while a handful were worried about rising costs. While six respondents said new orders and sales increased, only two reported higher employment.

Finance minister Choi Kyung-hwan has warned about the possibility of the South Korean economy entering "an early stage of deflation" after the Korean inflation rate remained below the mid-point of the Bank of Korea's rate.

TAIWAN: SIGNIFICANTLY LOWER (INDEX AT 33 VS 67 IN Q2)

Third-quarter Taiwan business sentiment fell to 33, its lowest since Q4 2012, depleting the gains of the previous quarter. Two-thirds of the respondents remained neutral and the rest responded negatively to the poll.

More than half the respondents were concerned about the global economy with the rest quoting rising costs and exchange rate volatility as the business risks. Employment levels are holding steady in Taiwan for the moment but two respondents reported a decrease in new orders and sales.

SOUTHEAST ASIA: MOSTLY STABLE (THAILAND AT 90 VS 91; PHILIPPINES AT 83 VS 100; SINGAPORE AT 50 VS 67; MALAYSIA AT 67 VS 67)

Sentiment among Southeast Asian businesses was mostly stable, although Thailand edged down and Singapore slipped to 50 from 67 as rising costs and worries about the global economy continued to divide opinions in the region.

The business outlook in Thailand fell to 90 after reaching 91 last quarter. Three out of five companies saw an increase in new orders and sales and employment levels remained the same for the majority of the firms as companies deal with political protests in the country.

The Philippines business sentiment fell to 83 from 100 last quarter with eight of 12 respondents showing a positive outlook. Five respondents reported higher employment levels and new orders and sales continued to show positive levels with 11 companies reporting increases.

The sentiment index among companies in Singapore was pessimistic at best with a reading of 50 compared to 67 the previous quarter with all 13 respondents maintaining a neutral stance. There was a minor increase in employment levels and new orders and sales.

Indonesia business sentiment numbers were slightly skewed for the quarter as no Indonesian companies participated in the Q2 survey. In comparison to the Q1 reading of 50, Indonesia posted a significant gain of 75. There has not been a major movement in the employment levels and the new orders and sales levels of the economy.

Notes:

** Companies sampled for the survey may change from one quarter to the next.