Chief financial officers in Asia expect capital spending and earnings to increase by more than 10%, with domestic employment rising 4% to 6% in the next 12 months, finds the Duke University/CFO Magazine Global Business Outlook Survey for the first quarter of 2010.
Intense price pressure, weak consumer demand and domestic competition still continue to be the top concerns for Asia's CFOs, says the study, adding that government policies are also a source of worry for the executives.
This is the 56th consecutive quarter the Duke University/CFO Magazine Global Business Outlook survey has been conducted. The survey concluded February 26, 2010, and generated responses from 1,389 CFOs, including 620 from the U.S., 163 from Europe, 325 from Asia (not including China), and 281 from China.
The study finds that 77.3% of Asia's CFOs (excluding China) are more optimistic about the economy of the country where they are based, a 3% increase from the previous quarter. Over in China, 63.4% of the finance chiefs say they are also more optimistic, a slight 1.4% rise from the previous quarter's results (62%). U.S. and European optimism significantly lag behind Asian optimism.
Another finding is that inventories will grow at nearly half of Asian firms because of new product lines and increased demand overall. In China, more than half of the firms plan to increase their inventories, also because of additional product lines and rising demand.
Finding and retaining qualified employees is a major concern for Asian companies, especially in China. Other top company-specific concerns include maintaining profit margins and maintaining employee morale. Ability to forecast results are also a challenge faced by Asia's CFOs.
Meanwhile, 36% percent of Chinese firms will be active in mergers and acquisitions in 2010 compared to only 28.9% of Asian firms that will be on acquisition mode.
Asian and Chinese companies say that, on average, borrowing conditions have worsened in the past six months.