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Growth expectation moderates - Southeast Asia Capital Confidence Barometer: October 2012 - April 2013 - EY - Singapore

Southeast Asia Capital Confidence Barometer – October 2012 – April 2013

Growth expectation moderates

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What is your perspective on the state of the global economy today?

What is your perspective on the state of the global economy today?

Please indicate your level of sentiment in the following at the global level:

Please indicate your level of sentiment in the following at the local/home level:

What is your perspective of the local economy today?

On which of the following capital management issues is your company today placing the greatest attention and resources?

Which statement best describes your organization’s focus over the next 12 months?



Emphasis on growth is overtaken by productivity, margin and cost pressures as well as heightened consciousness of risk management.

Six months after expressing significantly improved confidence, the tide appears to have turned for a majority of the Southeast Asia respondents.

In the current survey respondents conveyed a sense of pessimism about the outlook for both global as well as their local economies, amidst continuing economic uncertainties.

Globally, the number of respondents who expressed that the world economy is stable increased from 28% six months ago to 46% in the current survey. However those who felt that it is declining also increased from 20% to 31% during the same period, reflecting a more cautious view from 6 months ago.

Southeast Asia respondents are markedly more pessimistic than those surveyed in the rest of the world.

Only 33% of the Southeast Asia respondents, compared with 28% six months ago, felt the global economy is stable (Figure 5). A significant 54% felt that the global economy is declining compared to 42% six months ago.




54%

of the Southeast Asia respondents, felt the global economy is declining compared to 42% six months ago.



The most pessimistic views about the global economy are expressed by Singapore respondents. None of them see any sign of improvement in the global economy, compared to 24% six months ago.

Corporate earnings face impact caused by uncertainties

41% of the Southeast Asia respondents expect corporate earnings to decline due to unstable global economic conditions, up from 30% who felt similarly six months ago (Figure 7 and figure 8).

There was also a sense of pessimism among the Southeast Asia respondents about credit availability. Only 21% of the Southeast Asia respondents felt that credit availability is improving, down from 32% six months ago.

While optimism has faded and realism has set in, 42% of the Southeast Asia respondents indicated that their local economies are stable compared with 24% six months ago. (Figure 9)

36% indicated that it is improving, down from 54% six months ago.

The sentiment is similar among the Global respondents, with 44% of them indicating that their local economies are stable, compared to 36% six months ago. 36% of them indicated that their local economies are improving, down from 50% six months ago.

Indonesia respondents are the most bullish, with 89% indicating that their local economy is either stable or improving, compared with 61% in Singapore and 77% in Malaysia.

Emphasis on growth is overtaken by productivity, margin and cost pressures as well as heightened consciousness of risk management.

75% of the Southeast Asia respondents identified issues such as efficiency, productivity and cost control as getting much greater emphasis in boardroom discussions.

48% expect the continuing Eurozone crisis to create significant revenue and margin pressures in their businesses.

Focus on risk management, corporate governance and regulatory change has heightened for 77% of the Southeast Asia respondents.

Capital allocation: a key issue on the corporate agenda

Given the margin- and cost-pressures and continuing economic uncertainties, 48% of the Southeast Asia respondents have placed greater emphasis on capital optimization activities (Figure 10)

The appetite for investing capital is markedly reduced compared with six months ago.

47% of the Southeast Asia respondents consider organic growth through innovation and R&D a core focus for corporate boardrooms, compared with 56% six months ago (Figure 11).



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