The popularity of using renminbi as settlement currency is growing among investors in Asia, according to a survey conducted by Standard Chartered.
According to the first in a series of corporate sentiment surveys conducted by the banks equity research team, 37% of respondents are using RMB or plan to use it as a settlement currency.
The survey, which polled 529 C-suite executives from seven Asian economies and 12 industry groups, also found that executives have growing confidence among corporates in Indonesia and in the energy sector, as well as a better inflation outlook in 2012 for most Asian economies.
The energy sector is expected to benefit from a wave of new capital in 2012, with 44% of respondents indicating their plan to tap into the debt market for raising new capital.
Investment implications from the survey support our recommendation for continued emphasis on companies that focus on domestic demand, particularly in Indonesia, says Clive McDonnell, chief equity strategist at Standard Chartered equity research. We also expect margin pressure to ease in 2012, reflecting improvement in inflation expectations.
As for key challenges, 28% of respondents see demand as their greatest obstacle, followed by cost pressures at 25%. Regulatory uncertainty is also a concern, with 19% of respondents indicating it as their biggest challenge.
A likely recession in the West in 2012, as judged by our respondents, has failed to dampen bottom-up corporate sentiment in Asia, says McDonnell. Our Aggregate Index signals a slight improvement in the lead indicators for business prospects in the year ahead, despite challenges of demand, cost pressures and regulatory obligations.
Based on the responses, the research team also concludes that new orders are centered on economies that are more domestically oriented, including Indonesia, India and Thailand. Capex and hiring plans are also biased toward those economies, whereas cyclical economies (with the exception of Korea) and sectors are less positive, Standard Chartered says.
(CG)