Asia's business sentiment drops sharply in Q3

No thanks to a stuttering global economy.

Business sentiment among Asia's top companies deteriorated in the third quarter, interrupting three consecutive quarters of an improvement, with global economic uncertainty remaining the biggest concern for the region's firms, the latest Thomson Reuters/INSEAD Asia Business Sentiment survey showed.

The Thomson Reuters/INSEAD Asia Business Sentiment Index <RACSI> fell to 66 in the third quarter from 71 in the second quarter when it reached the highest level in more than a year. An index reading above 50 indicates an overall positive outlook.

Some of the weakest readings came from north Asia's export-orientated economies of China, South Korea and Taiwan, and regional trading hub Singapore, all of which turned in readings of 50 – highlighting the impact of a stuttering global economy.

"Asian companies are still maintaining a relatively cautious outlook regarding their earnings growth prospects," said Fan Cheuk Wan, chief investment officer for the Asia-Pacific region at Credit Suisse's private banking and wealth management unit.

"It could be partly related to the recent volatility across the emerging economies over the past three months."

Asian equities, currencies and bonds have taken a beating over the last few months after the U.S. Federal Reserve hinted it would halt its nearly five-year policy of flooding markets with cheap cash.

"This market volatility also inevitably has an impact on the perception and business sentiment of Asian corporates as they are still assessing the global growth outlook," Fan said.