The new PM's admirers may perhaps call it the Narendra Modi effect; a survey shows that Indian companies were the most optimistic in Asia about business prospects in the second quarter of 2014 compared to the first three months of the calendar year, despite worries over the global economy, rising input costs and volatility in exchange rates.
The latest Thomson Reuters / Insead Asia Business Sentiment Survey reported today that of the 124 companies that responded to the Asia-Pacific poll, none reported a negative outlook for the first time in the survey's history. The Thomson Reuters Business Sentiment Index rose significantly to 74 in the second quarter compared to a 64 reading in the first quarter.
A reading above 50 indicates an overall positive outlook.
Indian companies were the most optimistic, with all 10 respondents reporting a positive outlook, a level last seen in the fourth quarter of 2012.
Nine of the Indian companies said new orders and sales increased in the second quarter while employment levels rose for 60 per cent of the respondents. Three companies said delays in payments from customers had declined.
Australia too more optimistic
Business confidence among companies in Australia recovered in the second quarter even as half the participants continued to worry about the global economy.
Of the 12 respondents, which included Stockland Corp and Oil Search, seven companies were positive while the rest remained neutral, an improvement over the last quarter where only two of seven companies were positive.
Five companies said their new orders increased while the same number said they hired more people. Close to a third of all companies surveyed have increased employment levels in the second quarter.
Sentiment in China rebounded as a third of companies polled reported a positive outlook and 50 per cent of the participants saw an increase in new orders and sales in the second quarter. Last quarter all eight respondents held a neutral outlook.
Nine of the 15 participants said global economic uncertainty was the top risk, a worry shared by more than 50 per cent of 124 companies surveyed in the second quarter. A handful of Chinese firms are concerned about rising costs.
The world's second-largest economy is struggling to recover from an economic slowdown, exacerbated by deterioration in the property market, despite government stimulus. This has pulled the sentiment index down from its peak of 95 in the first quarter of 2011.
Japan's confidence slips
Business sentiment in Japan weakened slightly, with the global economic environment primarily weighing on corporate outlook.
Of the 16 respondents, which included Daiichi Sankyo Co Ltd, Canon Inc, Seven & I Holdings and NTT DoCoMo, 14 were neutral on the outlook and two positive, similar to the previous survey.
While risks associated with exchange rate volatility abated in the second quarter, a handful of companies continued to worry about rising costs. Fewer companies reported an increase in new orders and employment levels over the last quarter.
South Korea worried
Global economic uncertainty weighed on sentiment at South Korean companies with the economy's index falling to 50 in the second quarter from 67, last quarter.
All 19 respondents said their outlook was neutral with the majority concerned about the global economy while a handful were worried about rising costs. While half the respondents said new orders and sales increased, only three reported higher employment.
In the previous quarter a third of the companies had a positive outlook while the remaining six were neutral.
Taiwan optimistic; Thailand rebounds
Optimism returned to Taiwan's sentiment index, reversing the decline in the March quarter. Two of the six respondents turned positive in their outlook compared with none in the last survey.
Companies were concerned about the global economy, rising costs and exchange rate volatility. Two respondents lowered employment levels this quarter compared with steady levels last quarter while two companies reported an increase in orders, compared to just one in the previous quarter.
Sentiment among Southeast Asian businesses was mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region.
The business outlook in Thailand turned positive after two quarters of negative sentiment as political turmoil in the country eased.
The index rose to 91 from 41 in the last quarter - the highest level since the first quarter of 2012 - as 12 of 16 companies saw an increase in new orders and sales. Worries over political stability, among other things, remained.
The Philippines, along with India, was the most optimistic with all 15 respondents showing a positive outlook which remained unchanged at 100. Two-thirds of the respondents reported higher employment levels while almost all saw an increase in new orders and sales.
The sentiment index among companies in Singapore remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral. Only three of six companies said new orders and sales increased this quarter compared with eight of nine respondents last quarter.
There were no responses from Indonesia, South-east Asia's biggest economy.