Business sentiment recovers in Q1, but it's too soon to pop the champagne: report

Executives are hoping for an improvement in China.

Business sentiment in Asia inched up marginally in the first quarter of 2016, as corporates grew less wary of the economic slowdown in China.

The latest Thomson Reuters/INSEAD Asian Business Sentiment Survey showed that business confidence rose to a score of 65 in March, compared to a reading of 58 in December. A reading over 50 indicates a positive view.

“People are digesting the economic slowdown in China and are being more optimistic and looking for opportunities rather than being alarmist, and that shows up in the numbers around the region, particularly Singapore,”said Antonio Fatas, economics professor at INSEAD.

The companies ranked a decline in Chinese demand as the primary risk to their outlooks, followed by excessive foreign exchange volatility and falling oil prices.

Business confidence in Singapore registered the quarter's steepest rise in sentiment at 29 points, resulting in a neutral subindex at 50 after two deeply pessimistic quarters.
In its top trading partner China, sentiment rose 21 points to 71.

However, the report cautioned that it is too soon to cheer the economic improvement in China.

“The index is not an amazingly great number but it tells us there is certainly less pessimism now than in previous surveys,” Fatas noted.