SEB's China Financial Index: Mixed picture in companies' view of China's growth. Almost half of companies see better order intake while one third see falling sales.
(Thomson Reuters ONE) -
Northern European companies have a less positive view on the business climate.
SEB's China Financial Index in September falls to 57.1 from 62.6 in February.
Over half of the companies saw sales increase in the first six months of the
year, but are slightly less optimistic about the remainder of the year. Less
than half of the companies think that sales will increase in the coming six
months and profit expactations also fell slightly in this survey. One third of
companies saw falling sales figures in the first six months of the year and
roughly the same number of companies expect sales to fall further in the coming
six months. Investment plans remained relatively unaffected while more companies
that previously cut down on recruitment plans. Salary increases fell
significantly in this survey.
Economic data from China have been worrying lately. The official GDP figure
landed at 7% but a fresh string of data show that growth is currently losing
steam. Leading purchasing managers indexes fell in August to the lowest levels
seen in 16 months and imports, calculated in Chinese yuan, fell by 14.3% the
same month while exports fell by 8.9% in July and 6.1% in August compared to the
same months last year. China's devaluation and the stock market crash of over
40% have scared financial markets around the world and hardly a day goes by
without headlines in international media warning of a looming crash in the
Chinese economy.
Top managers of Nordic and German subsidiaries in China confirm the picture of a
slowed down economy in SEB's latest China Financial Index, but the pictures
varies between companies and industries. Only one in four companies has a
neutral view of the the business climate the coming six months while more
companies are positive than those that have a negative view.
Expansion plans are only marginally affected: Over half of companies plan for
further investments and the rest are not investing at the moment. Recruitment
plans fell slightly. One third of companies will continue to add employees in
China while half of the companies keep the current staff number. Fifteen percent
of respondents say they will cut down on staff in China.
More companies than previously, over half, view lower customer demand as the
largest concern in this survey. Other companies view competition, foreign
exchange risks and salary levels as the major concern.
"The result of this survey confirms two important conclusions: First of all, in
line with other indexes our survey shows that economic activity in China is
falling and the prospects look gloomier than six months ago. On the other hand,
a second equally important conclusion is that things don't look as bad as the
impression may be when reading news around the world lately" says Fredrik
Hähnel, Head of SEB in China and author of the report.
"Yes, one third of our clients say that they saw declining sales in the first
six months. That is a worrying sign that cannot be ignored. However, it is not
really anything we didn't know already. Industrial companies in China have seen
a decline coming for quite some time and many of them are acting in segments of
the Chinese's economy that don't seem to grow at the moment. But the fact
remains that over half of our clients said their sales increased this year and
almost as many expect the order books to develop well for the remainder of the
year. The golden years of rapid growth may be over for certain industrial
companies in China. But for a very large number of companies selling consumer
goods, professional services, medical equipment etc. sales seem to hold up well
and if anything, these companies will be investing more in China. And for them
and all other companies out there, the potential to work on the cost structure
and keep up profitability is not to be underestimated.
The Chinese Central Bank, PBOC, has cut rates five times in the last year and
also lowered the reserve requirements for banks. In August, PBOC devalued the
Chinese Yuan by 3% and analysts expect that this will be followed by more fiscal
stimulus packages with more investments in infrastructure for example.The
inflation has continued to fall but rose in August to 2%, mainly due to higher
food prices. The Chinese producers prices fell 5.9% in August and have now
fallen for 42 consecutive months as a result of industrial overcapacity, falling
raw material prices and a strong Chinese currency. This has also led to more
companies adjusting their staff structure in China and lowering the salary
increases.
"Companies keep investing according to earlier plans but more than previously
cut down on recruitment plans. Some companies even plan to reduce their staff in
China. However, the absolutely most dramatic change in this survey is that
salary increases fall so rapidly. Only six months ago, half of the companies
expected salary increases to be 7-8% or higher and no companies planned for
salary increases below 3%. Today, only one of five companies plans to increase
salaries by 7-8% or higher. One third of companies plans a salary increase of
5-6%, one of four says 3-4% while one of four companies will only increase
salaries by less than 3%. Fredrik Hahnel continues.
"I think there will be a very large focus on costs and efficiency improvements
among North European subsidiaries in China going forward. Previously, companies
grew so fast that it didn't matter if costs increased but we see a trendshift in
discussions with our clients at the moment, especially among industrial
companies. Global management and financial analysts will put a high pressure on
the subsidiaries to control their costs. Especially if sales growth continues to
be subdued"
Seven out of ten companies expect the renminbi to weaken against the US dollar
in the coming six months while 25% think the exchange rate will be stable.
Financing needs continue to fall among the companies and only one in ten expects
increasing financing needs. One out of four companies uses the CNY as their
trading currency for import and export flows and four of ten companies are not
planning to hedge their currency risks inspite of the recent volatility in the
currency market.
This is the fourteenth edition of SEB's China Financial Index, an unique semi-
annual survey. The purpose is to mirror changes in expectations among North
European companies in China, in order to facilitate understanding of economic
and financial development in the country. The survey was carried out 26(th)
August - 9(th) September, 2015, and includes a total of 13 questions related to
business climate, investment plans, recruitment plans and views on currencies.
An index level over 50 signals overall positive sentiment. The full report can
be downloaded from: www.sebgroup.compress.
For further information, please contact Press contact
Fredrik Hähnel, Head of SEB China Anna Helsén, Press Officer
+86 1381 680 99 77 +46 70-698 48 58
fredrik.hahnel(at)seb.se anna.helsen(at)seb.se
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SEB is a leading Nordic financial services group. As a relationship bank, SEB
in Sweden and the Baltic countries offers financial advice and a wide range of
financial services. In Denmark, Finland, Norway and Germany the bank's
operations have a strong focus on corporate and investment banking based on a
full-service offering to corporate and institutional clients. The
international nature of SEB's business is reflected in its presence in some
20 countries worldwide. On June 30, 2015, the Group's total assets amounted to
SEK 2,760 billion while its assets under management totalled SEK 1,780
billion. The Group has about 16,000 employees. Read more about SEB
at www.sebgroup.com.
Press release (PDF):
http://hugin.info/1208/R/1953749/711005.pdf
China Financial Index:
http://hugin.info/1208/R/1953749/711000.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: SEB via GlobeNewswire
[HUG#1953749]
Unternehmensinformation / Kurzprofil:
Datum: 23.09.2015 - 08:30 Uhr
Sprache: Deutsch
News-ID 422006
Anzahl Zeichen: 9373
contact information:
Town:
STOCKHOLM
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 173 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"SEB's China Financial Index: Mixed picture in companies' view of China's growth. Almost half of companies see better order intake while one third see falling sales."
steht unter der journalistisch-redaktionellen Verantwortung von
SEB (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
