Asian Corporates Exhibit Increased Optimism in Global Outlook, According to Survey
The percentage of respondents viewing a recession in the West as likely or very likely dipped to 43%, compared to 93% in the prior quarter, according to Standard Chartered’s Corporate Sentiment Survey across Asia (excluding Japan).
The consumer sector, a traditionally defensive sector, was hailed as a consistent performer, garnering the most optimistic corporate sentiment among survey respondents. Reasons for the positive sentiment amongst corporates may reflect the structural trend towards higher consumption and lower savings across the region.
Clive McDonnell, chief equity strategist at Standard Chartered equity research, said: “Our survey continues to paint a detailed picture of the bottom-up outlook for corporates in Asia ex Japan. In particular, we note the consistent performance of the consumer sectors and the increasing use of the RMB [renminbi] as a settlement currency. We view both trends as structural in nature and investors should continue to position portfolios to take account of these signals.”
Addressing the observed increased use of the RMB as a settlement currency, McDonnell added: “We would focus attention on mid-sized Hong Kong banks that can leverage their China bank licences to extract value from this trend. Another possibility is to increase exposure to companies with RMB streams of revenue and profit as increased RMB use points to structural appreciation pressure on the currency over time.”
Analysis of the responses to the survey highlights a number of nuanced conclusions, with specific investor implications: