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Asian enterprise confidence positive factors steam, pandemic nonetheless prime danger :Thomson Reuters/INSEAD survey By Reuters

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© Reuters. FILE PHOTO: Media tour at Chinese vaccine maker Sinovac Biotech in Beijing

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From Anshuman Daga

SINGAPORE (Reuters) – Asian companies were the most optimistic in the fourth quarter of this year. That’s what a Thomson Reuters / INSEAD survey found as business increased in the region and COVID-19 vaccine rollouts began in western countries before their rollout in Asia.

The outlook for Asian companies for the next six months, as captured by the Thomson Reuters / INSEAD Asian Business Sentiment Index, rose from 53 in the third quarter to 62 this quarter.

The most recent number, according to a survey of 101 companies in 11 countries in the Asia-Pacific region, was the highest since the fourth quarter of 2019. A value above 50 indicates a positive outlook.

“The future is optimistic,” said Antonio Fatas, Singapore economics professor at INSEAD Global Business School.

“Things are getting better, but they are getting better with still some uncertainty. The impact of the crisis is very different across sectors,” he added, noting the weakness of the transport sector due to the restriction on global travel.

Still, more than half of those surveyed identified persistent cases of the novel coronavirus and the possible shortage of vaccines in parts of the world – at least initially – as their greatest risk.

While the United States and Britain have already started vaccinating their populations, few Asian countries are expecting significant amounts of coronavirus vaccines in the coming weeks.

Some Asian countries are still conducting their own studies of late-stage vaccines, while others are allowing time to look for side effects in people vaccinated elsewhere.

A quarter of companies in the survey, conducted between December 4 and 18, were most concerned about the job losses by companies, which would affect consumption.

Still others said their top risks jeopardize a withdrawal of incentives by the central banks, and the newly elected President of the United States, Joe Biden, is taking a hard line on China.

The coronavirus pandemic has resulted in the worst global economic slowdown since the Great Depression, which lost millions of jobs and brought industry to its knees.

Still, Asia is hoping for an economic recovery, which has been more successful than Europe and the United States in fighting the virus.

Graphic: Business sentiment in Asia compared to share performance https://fingfx.thomsonreuters.com/gfx/mkt/rlgpdqxddvo/Business%20sentiment%20in%20Asia%20vs%20share%20performance.jpg

YEAR OF THE PHOENIX

“After a year of economic contraction, 2021 will be the ‘Year of the Phoenix’ with a strong recovery in global gross domestic product and corporate profits in 2021 thanks to vaccine settlement and significant political support,” said Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management.

A rebound to pre-pandemic levels in China, the world’s second-largest economy, has raised hopes for a revival. Stock markets in China, South Korea, and Taiwan are up at least 20% this year, leading the region’s earnings.

According to the Thomson Reuters (NYSE 🙂 INSEAD survey: 44% of companies surveyed in the fourth quarter were positive about their outlook for the next six months, up from 28% in the third quarter and nearly 8% in the second quarter.

About 58% of companies said they hadn’t hired or laid off employees during the quarter, and a fifth said the workforce was lower. This was similar to the third quarter. In the second quarter, 62% of companies said they had cut jobs.

“Although I still see some uncertainty, the numbers are good,” said Fatas. “It looks like a recovery that is accelerating and that more companies feel confident about.”

Companies surveyed included India’s Housing Development Finance Corp Ltd, Japanese automaker Suzuki Motor Corp, and Thai electronics company Delta Electronics (Thailand) PCL.

Note: The companies surveyed may change from quarter to quarter.

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