Majority of Asia-Pacific CFOs to Tap Cash Reserves, Increase Headcounts

by CFO Innovation Asia Staff, 31 May 2012

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Management

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American Express/CFO Research Global Business & Spending Monitor cash reserves economic outlook hiring spending

A majority of finance executives across the Asia-Pacific region expect to see economic expansion in their respective countries this year, with the outlook being brightest in India (86%) and the least optimistic in Japan (36%).

In the fifth installment of a global survey of 541 senior finance executives by American Express/CFO Research Global Business & Spending Monitor, 35% of the respondents came from Asia-Pacific. The respondents mostly came from Australia, Hong Kong, India, Japan and Singapore. The other Asian countries represented are China, Korea, Malaysia, Pakistan, Philippines, Taiwan, and Vietnam.

This year, 57% of Hong Kong executives (compared to 64% of all respondents) report expectations for “modest” or “substantial” expansion over the next twelve months, but that’s lower than in 2011 (79% of respondents in Hong Kong anticipated economic expansion versus 75% overall) and 2010 (88% for Hong Kong; 71% overall).

In Singapore, finance executives there are still cautiously optimistic about economic growth prospects, with about half (47%) of them saying that they expect to see economic expansion in the country next year.

Opening the Coffers

After amassing large cash reserves as a buffer against the economic uncertainty of the past few years, finance executives say their companies intend to deploy these resources in 2012.

In contrast with last year, when a sizeable majority of all respondents(62%) were pursuing a deliberate cash preservation strategy, almost half of all participants in this year’s study (45%) now say their companies are planning to spend down a portion of their cash reserves in the next twelve months.

In contrast, Singapore-based finance executives were more conservative, with 32% saying they will use some of their reserves this year. Almost all finance executives (97%) in Singapore say they are likely to use this cash to fund ongoing operations.

In Hong Kong, 89% indicated that ongoing operations are “very” or “somewhat” likely destinations for cash reserves.

Other cited destinations for cash reserves include expanded operations and headcount (80% for Hong Kong; 79% for Singapore); increased research and development (79% for Hong Kong; 74% for Singapore)l and mergers and acquisitions (74% for Hong Kong, 86% for Singapore).

Companies are likely to take a conservative approach to spending and investment over the coming year.

Senior finance executives based in India and Japan are more likely than their peers to spend and invest aggressively to boost top-line growth.

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