SINGAPORE (Reuters) - Business sentiment among Asia’s top companies rose in the fourth quarter with builders switching to most optimistic from least just three months earlier due in part to increased new orders, while property developers also showed a rise in sentiment.
Financial institutions and shipping firms stayed rooted to an average outlook of 50, the breakeven point between optimists and pessimists and the lowest reading in this quarter’s survey. Financial firms cited global economic uncertainty while shippers pointed to reduced orders.
The Thomson Reuters/INSEAD Asian Business Sentiment Index .RACSI rose to 72 in the fourth quarter, up from 66 in the previous three months.
Sentiment hit a one-year high as all seven firms surveyed, including the world’s top fiber cement products maker James Hardie Industries PLC (JHX.N) (JHX.AX), gave a positive outlook. Five reported higher orders and sales, versus two of four firms in the prior three months.
Optimism surged to the highest in over a year, with 11 of 15 companies positive about the outlook, versus four positives last time. Respondents included India’s largest real estate developer, DLF Ltd (DLF.NS).
Chinese firms were neutral amid worries about the domestic market, where cities are battling excess housing supply.
Sentiment among retailers hit its highest since the survey began in 2009 after two quarterly drops, with six of nine firms giving positive outlooks versus two of eight surveyed last time.
Rising costs were the biggest concern, including for Japan’s biggest convenience store operator Seven & I Holdings Co Ltd (3382.T) which has been hit by weakening consumer spending.
Food firms were their most bullish since early 2013, with most showing higher orders and sales. Rising costs, however, were among the worries for respondents, including Japan’s Asahi Group Holdings Ltd (2502.T).
Sentiment dropped to a two-year low as five of 24 firms polled negative, versus none from the 19 surveyed last time. Global economic uncertainty was the top risk cited by firms, including Japan’s Canon Inc (7751.T) - the world’s largest camera maker - and Hitachi Ltd (6501.T).
Drugmakers were less optimistic with two of five polling positive. Comparisons were hurt as the third-quarter survey had 10 participants. Respondents included Lupin Ltd (LUPN.NS), India’s No.2 drugmaker by market value.
The outlook edged lower as two firms, including Australia’s Oil Search Ltd (OSH.AX), reversed their forecast to negative from positive in the prior three months. Two others saw a drop in orders and sales, compared with one in the third quarter.
Global economic worries hobbled resource companies, with energy-related firms hit by a 40 percent rout in oil prices over the past five months.
Sentiment among automakers held steady at a three-year high. Three of six respondents polled positive, while new orders and sales rose at four automakers. Global economic uncertainty and rising costs were among the biggest worries for most participants, including India’s Hero MotoCorp Ltd (HROM.NS).
The outlook steadied, after dropping for two quarters, as all 10 participants polled neutral, including Taiwan’s Yuanta Financial Holdings Co Ltd (2885.TW). In the third quarter, two of 14 were negative. Global economic uncertainty remained the key risk.
This sector’s outlook was mired at one-year lows as one of six firms polled negative while another saw sales and orders drop. South Korea’s Hyundai Heavy Industries Co Ltd (009540.KS), the world’s top shipbuilder, was one of the respondents.
Reporting by Himani Sarkar; Editing by Christopher Cushing