Bosses upbeat amid global concerns
Most in expansionary mode with services, construction among most bullish: Survey
BOSSES are staying optimistic as they head into the second quarter despite the concerns and uncertainties arising from the unrest in the Arab world and the continuing fallout from the nuclear crisis in Japan.
Most even expect better sales, profit and employment activities, according to a survey out yesterday from credit rating firm D&B Singapore.
Services and construction firms were the most bullish, according to the poll of 200 bosses.
'Singapore's economy may suffer temporary slowdown as trade is disrupted due to Japan's recent disaster,' said D&B.
'But with an increase in new orders expected, the general outlook of the manufacturing industry remains upbeat, although a decline in inventory level is to be anticipated.'
D&B's quarterly Business Optimism Index, as the survey is called, compares net percentages of respondents' expectations in areas such as sales, profits and hiring against the previous quarter.
A positive reading indicates optimism, zero means no change and a negative number flags that the respondent expects a drop in performance.
The net profit index for the second quarter was 29 per cent, up from 16 per cent in the first quarter.
This was driven mainly by the strong showing of the services and construction industries, which both tip even better days ahead.
Manufacturers also saw marked improvements in their order books, said D&B.
The new orders index for the second quarter came in at 36 per cent compared with negative 11 per cent in the last quarter.
In terms of hiring, services and manufacturing firms were strongest, both recording around a 37 per cent and 36 per cent in the employment index respectively.
This means they plan to increase their headcounts in the second quarter, mostly to meet growing demand.
Similarly, the sales volume index was also higher overall at 33 per cent compared with 19 per cent in the previous quarter.
D&B also said it expects gradual shifts in policymaking following the election with more efforts targeted at generating sustainable growth for a more robust economy.
'The economy is expected to be less reliant on foreign workers and the priorities for the next few years would be focused on boosting labour productivity and increased investments in research and development,' it said.
The outlook is similarly upbeat across South-east Asia, with a separate study by Ernst & Young (E&Y) showing that corporate confidence is high.
Ernst & Young polled about 1,000 senior executives of mid-to-large sized companies around the world, including 80 from South-east Asia in March.
The findings out yesterday showed that 68 per cent of the respondents from the region expressed optimism about their domestic economies while 45 per cent believe the downturn is over in their respective industries.
The survey also found that most firms polled are focused on organic growth while also eagerly looking for possible acquisitions for growth.
These companies also say they do not have funding problems, with 45 per cent of executives saying that access to finance for their firms is not a problem.
Despite the strong demand for assets and a rise in takeovers, firms are paying 'more realistic prices' compared with before the financial crisis, said Mr Harsha Basnayake, E&Y's transaction advisory services leader for Singapore and Southeast Asia.
He said that just before the crisis, the prices firms were willing to pay 'blew (away) every fundamental logic that was underpinning the business'.
'We are not in that environment (and) while pricing remains realistic, I think boardrooms and business development teams that are looking for opportunities are also very cautious in the amount of money that they are willing to spend,' said Mr Basnayake.
'They don't want to pay too much of a premium, given that there is a bit of uncertainty beyond a 12-month period as to how the global economy will pan out.'