SEB's latest China Financial Index indicates positive view on China continues among corporates
(Thomson Reuters ONE) -
* Good momentum, but 14 per cent expect order intake to weaken in the next six
months
* Despite a positive outlook, major expansion plans are still on hold in
China, while the majority of companies still plan to increase the number of
staff
* Customer demand and competition remain key concerns for doing business in
China
* The latest SEB Financial Index stands at 61.9, up from 61.6 in March 2017
and 58.6 a year ago
Companies that participated in our survey maintain positive a view on doing
business in China, with two-thirds expecting an increase in profits. The outcome
is in line with data released by the Chinese National Bureau of Statistics
(NBS), which revealed that in August profits of China's industrial companies
jumped 24 per cent year-on-year, while in September growth was 7.7 per cent
year-on-year. Despite the positive results, the change in expectations is almost
flat from the last survey six months ago. Good momentum is expected to hold, but
growth is levelling off.
The majority of corporates expect to expand their order intake, but the momentum
is cooling off, indicating the ongoing trend in China that growth is being
partly generated from the surge in producer prices rather than exclusively in
volumes. This year producer prices for the industrial sector have been peaking.
The Producer Price Index (PPI), released by NBS, was up 6.9 per cent year-on-
year in September, and this year it has increased by an average of 6.5 per cent
year-on-year. Therefore it is relevant to conclude that the PPI has been a
factor that has driven the increase in manufacturers' profits. "The results of
our China Financial Index survey reveal that the pressure in rising material
costs is of a lesser concern for corporates compared to the last survey in
March. This indicates that companies have been able to pass some costs along to
customers," says Niina Äikäs, General Manager of SEB Shanghai.
The survey suggests that a number of issues remain challenging in China. The
market situation is causing the most concern for corporates. Six out of ten
firms answered that customer demand or competition is their greatest concern.
However, payment collection from customers is now less of a concern for firms
compared to the previous survey conducted in February this year. This is good
news, as publicly available data indicates the number of bad loans to be still
rising in China.
Even though firms report to be blooming in China, it seems that in the long
term, the outlook is more cautious and conservative. Only some firms are
investing significantly in the country. With GPD expected to grow 6.7 per cent
this year, SEB has projected GDP to maintain the annual growth rate over 6 per
cent in the coming two years. "The historical data reveals that the shift from
an investing to a maintaining mode started in early 2015. There are many reasons
why this is the case. Talking with corporates, it seems that higher costs,
particularly rising salaries, as well as overcapacity issues, more intense local
competition and the recent regulatory environment are making companies more
cautious," says Niina Äikäs.
Most of the corporates surveyed are manufacturers, representing what is known as
"the old China", while less than 10 per cent of respondents are from the service
sector. It is not surprising that the few corporates that are part of the
service sector are much more confident and growing faster by every measure in
China, reflecting the country's attempt to restructure toward a service-based
economy. The tertiary sector made up 51.6 per cent of the country's GDP in
2016; China is aiming to increase this to 70-80 per cent, in line with the
average for advanced countries. Aside from the service industry, firms in the
chemical, plastics and paper industries are scoring above the survey's average,
reporting growing confidence and investing more.
This is the eighteenth edition of SEB's China Financial Index, a unique semi-
annual survey. The purpose is to mirror changes in expectations among Nordic and
German companies in China, in order to facilitate understanding of economic and
financial development in the country. The survey was carried out between 7
September 7 and 27 September 2017 and includes a total of 14 questions related
to the 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
Niina Äikäs, General Manager, SEB Frank Hojem, press officer
Shanghai +46 70-763 99 47
+ 86 21 2052 1888 frank.hojem(at)seb.se
niina.aikas(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. At 30 September 2017, the Group's total assets amounted to
SEK 2,933billion while its assets under management totaled SEK 1,850 billion.
The Group has around 15,000 employees. Read more about SEB at
http://www.sebgroup.com
Press Release (PDF):
http://hugin.info/1208/R/2149234/824779.pdf
Report China Financial Index Fall 2017:
http://hugin.info/1208/R/2149234/824786.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: SEB via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 13.11.2017 - 13:30 Uhr
Sprache: Deutsch
News-ID 567849
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