SEB: SEB's China Financial Index rises: Northern European companies see better
business climate, higher profits and accelerated expansion plans
All parameters in SEB's China Financial Index - business climate, profit
expectations, investment plans and recruitment plans - are higher, and the
index climbs to 61.4 in March from 58 in September.
China's economy continued to slow during 2013. GDP growth lost momentum in
last year's the fourth quarter, and both export figures and confidence indices
have started this year pointing to lower economic activity. However, Nordic
and German business leaders continue to stay bullish, according to SEB's
latest China Financial Index. Around half of the top managers surveyed expect
a positive business climate and higher profits in the coming six months. Only
6% have a negative view while less than half expect business conditions and
profits to remain the same. More companies than previously (over a half) are
planning further investments and recruitments.
The number of companies that see lower customer demand as a main concern
continues to fall to 27 percent, down from 38 percent since the last survey
in September. Meanwhile, one out of four companies view competition as their
largest worry, which is the same as in the last survey. One of five companies
now finds lack of competent staff as its biggest headache.
"Companies have gained optimism since the last survey, even if changes are
fairly modest. What surprises me most is that fewer companies now view
deteriorating customer demand as their main worry. Every parameter in the
survey is up, which indicates an improving business climate in China. A key
reason our index may move in the opposite direction to other surveys is that
we only do it every six months. This means it captures more medium-term
sentiment," says Fredrik Hähnel, Head of SEB in Shanghai and author of the
Even if the Chinese economy grew faster than other leading economies, the
country has experienced slowing growth in 10 out of the last 12 quarters.
Growth for the fourth quarter 2013 ended up at 7.7 percent, down from 7.8
percent in the third quarter. China's official purchasing managers' index hit
an eight-month low in February at 50.2, adding signs of a slowing economy. The
new political leadership has met plenty of challenges during its first year in
power, with fast credit growth, falling capital allocation efficiency, severe
environmental problems and an urgent need to reform the financial sector. At
the party congress in Beijing last week, Prime Minister Li Keqiang repeated a
GDP target of 7.5 percent for 2014 and reiterated that reforms will
"Many are concerned with China's overcapacity and fast credit growth. However,
these factors have obviously not changed Northern European companies view of
the market. On the contrary, half of the companies expect business to improve
in 2014, and they continue to invest," says Fredrik Hähnel.
One-fourth of the companies view a fall in customer demand as the biggest
concern, which is lower than in the last survey. Another quarter view
competition as the main worry while one-fifth now say their biggest concern is
to find qualified staff. One-third of companies expect salary increases of 5-6
percent, while one of four companies expect it to be 7-8 percent during 2014.
One of five companies believe salary increases will be 9-10 percent and one of
ten says it will be above 10 percent.
"The picture is consistent with what we hear in discussions with clients in
China. There is no big change in sentiment but companies are positive. In
general, business leaders believe that 2014 will be a better year than 2013,
even if for example industrial companies must begin getting used to a lower
growth rate than previously. More companies are starting to be concerned with
cost development in China, as costs continue to increase rapidly. As
productivity is not improving at the same pace, China risks losing
competiveness over time. As of today, it is very uncommon for companies to set
up new manufacturing entirely for exports out of China. The focus is now on
the domestic market," says Fredrik Hähnel
Half of respondents believe that the renmimbi will appreciate against the US
dollar in the coming six months, while four of ten think it will be unchanged.
Four of ten companies also anticipate higher interest rates, while more than
half think they will remain the same.
This is the eleventh edition of SEB's China Financial Index, a 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
from 13 February to 4 March, and includes a total of 12 questions related to
business climate, investment plans, recruitment plans and views on currencies
and interest rates. An index level over 50 signals overall positive sentiment.
The full report can be downloaded from: www.sebgroup.com\press.
For further information, please contact Press contact
Fredrik Hähnel, Head of SEB in Shanghai Anna Helsén, Press Officer
+86 1381 680 99 77 +46 70-698 48 58
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 December 31, 2013, the Group's total assets amounted
to SEK2,485 billion while its assets under management totalled SEK1,475
billion. The Group has about 16,000 employees. Read more about SEB at
Press release PDF
China Financial Index Mars 2014
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Source: SEB via Globenewswire
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