BUSINESS OUTLOOK SURVEY
Asia’s CFOs remain more optimistic than their U.S. and European counterparts,
but nerves are starting to fray.
By Cesar Bacani and Nan Wang

When America sneezes, Asia catches a cold. This old saw was true enough in the last century, but it may be time for a revision.

In the latest Duke University/CFO magazine Business Outlook Survey, only 9 percent of CFOs in the United States are more optimistic about the U.S. economy than they were last quarter. In contrast, 53 percent of CFOs in Asia say they are more optimistic.

Why the difference? At least some of Asia’s finance executives believe that the region’s fortunes have now decoupled from America’s because of the economic rise of China and India, and the generally robust finances of governments, banks, corporations, and consumers. “Incomes are rising and people are inclined to spend more, which means more production and electricity use,” says Ajay Kapoor, CFO of North Delhi Power. “We are looking actively at expanding the business geographically and vertically and both inorganically and through organic growth.”

Still, the worries in the West are crossing over to Asia. Mingwei Bi, deputy finance controller at Chinese sportswear maker Anta, expects earnings to grow in the next 12 months because of the coming Summer Olympics. But he is concerned about rising inflation, a strong renminbi, and a 15 percent rise in labor costs at Anta.

And the level of optimism among the region’s CFOs (outside of China) is six percentage points lower than last quarter, down 19 points from the quarter before that. Optimism among CFOs in China is down from 41 percent last quarter to 31 percent in the latest survey.

So has Asia really decoupled from the United States? It’s hard to say. But this time, at least, the region’s CFOs may be counting on a simple case of the sniffles rather than the full-blown flu.