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Positive signs abound as coup boosts Thailand's business sentiment

BUSINESS SENTIMENT among Asia's top companies hit its highest level in more than two years last quarter, with those in the Philippines and India most upbeat and Thailand second, a ThomsonReuters/Insead survey showed.

"At the moment, stronger US growth, China providing some support to prevent collapse and the India story is still there. These are positives," Anthony Chan, senior economist for Asia at asset management firm AllianceBernstein, said yesterday.

Throughout the region, sentiment improved sharply on supportive political changes around the region, including the military coup in Thailand, and positive signs from China.

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 coup there last month, Chan said.

The index surveyed 200 of the Asia-Pacific region's top companies in 11 economies across industries from property to financials and tech. Companies included Japanese clothes maker Fast Retailing, South Korea's Hyundai Heavy Industries and Australian construction materials firm James Hardie Industries.

The poll, conducted from June 2-13, showed global economic worries, rising costs and other risks including political and regulatory uncertainty as 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.

The coup helped Thailand, Southeast Asia's second-largest economy, rebound strongly to 91 after months of anti-government protests dragged the country's score down to negative territory since the end of last year.

The 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 Southeast Asia, corporate sentiment in Malaysia sank to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100. China, Asia's largest economy, posted a score of 67, bouncing back from 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. Sentiment 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.

The Thai Industries Sentiment Index last month rose to 85.1 from 84.0 in April, the first increase in seven months, according to a survey of the Federation of Thai Industries (FTI) of 42 industries.

Operators saw positive signs for the economy following abating political tension and the payment to farmers in the rice-pledging scheme, which injected cash into the system.

FTI chairman Supant Mongkolsuthree said the index three months in advance rose to 101.0 from 98.2 in April, the first time the index exceeded 100 in five months.

Surapong Paisitpattanapong, vice chairman and spokesman for the FTI's Automotive Industry Club, said that since the National Council for Peace and Order seized power about a month ago, the local political unrest had settled down.

The junta had also implemented many pressing measures, including the return of money to the farmers participating in the rice-pledging scheme and the acceleration of disbursements of the fiscal budget. They had also passed the draft act for next year's annual spending.

Many projects set to develop the country's infrastructure and mass transportation systems would be urgently conducted and stimulate employment and the overall economy.

"We believe that domestic sales for vehicles will rebound in the second half of this year, starting from pickup trucks, small passenger cars and motorcycles," he said.

The country produced 148,201 vehicles last month, down 36.1 per cent year on year, following the end to the first car scheme. Of total |production in May, 62.2 per cent was exported, up 2.4 per cent on year.

Production from January to May fell 29.5 per cent on year to 792,423 units.

Arnut Changtrakul, corporate vice president for sales and marketing at Thai Samsung Electronics, said that after the political situation started to be much more stable over the past six to eight weeks, customers in Bangkok and major cities had increased by 20 per cent.

The home appliance market dropped 10-20 per cent at the beginning of this year, but started to pick up last month.

The company believes that the market would rebound significantly in the second half to the normal growth rate of 3-5 per cent for medium-end products and by |more than 10 per cent for premium goods.


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