Business sentiment among Asia's top companies hit its highest level in more than two years in the second quarter of 2014, with those in the Philippines and India being most upbeat and Thailand at the second, a Thomson Reuters/INSEAD survey showed.
The military coup in Thailand played a part in lifting up sentiment.
Throughout the region, the sentiment improved sharply on supportive political changes around the region and positive signs from China.
“At the moment, stronger US growth, China providing some support to prevent collapse and the India story is still there. These are positives,” said Anthony Chan, senior economist for Asia at asset management firm AllianceBernstein.
However, the sentiment spike may be short-lived. India is due a “reality check” after its election boost, China’s stimulus will create only a short-term lift, and there is still plenty hanging “in the balance” for Thailand after the military coup there in May, Chan said.
The index surveyed 200 of the Asia-Pacific region’s top companies in 11 economies across sectors from property, to financials and tech. Companies included Japanese clothes maker Fast Retailing, Korea’s Hyundai Heavy Industries and Australian construction materials firm James Hardie Industries Plc.
In the poll, compiled from June 2-13, showed global economic worries, rising costs and other risks including political and regulatory uncertainty were the key business concerns. Political changes around Asia sparked a positive mood in the countries affected with all 10 companies surveyed from India and the majority in Thailand reporting a positive outlook.
A military coup in May helped Thailand, Southeast Asia’s second-largest economy, rebound strongly to 91 after months ofanti-government protests had dragged the country’s score down to negative territory since the end of last year.
Business outlook in Thailand turned positive after two quarters of negative sentiment as political turmoil in the country eased. The index rose to 91 from 41 last quarter - the highest level since the first quarter of 2012 - as 12 of 16 companies saw an increase in new orders and sales. Worries over political stability, among other things, remained.
The army said it would end political unrest and revive the country’s flagging economy, boosting business and consumer sentiment. Thai consumer confidence rebounded last month for the first time in over a year.
Elsewhere in the Southeast Asian region, corporate sentiment in Malaysia sank to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100. No companies from Indonesia responded to this quarter’s survey. China, Asia’s largest economy, posted a score of 67, bouncing back from a score of 50 in the quarter before as Beijing’s “mini stimulus” package promised to help the country shift smoothly into slower gear and hit its growth targets for the year.
The Philippines, along with India, was the most optimistic with all 15 respondents showing a positive outlook which remained unchanged at 100. Two-thirds of the respondents reported higher employment levels while almost all saw an increase in new orders and sales.
The sentiment index among companies in Singapore remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral. Only three of six companies said new orders and sales increased this quarter compared with eight of nine respondents last quarter. There were no responses from Indonesia, the region’s biggest economy.