JETRO Monthly Survey Finds Japanese Business Sentiment in East Asia Continues Mixed in November.

Tokyo, Japan, Nov 29, 2006 - (JCN Newswire) - JETRO's monthly survey of Japanese companies and affiliates operating in 12 countries/regions of East Asia revealed that sentiment in the ASEAN region continued on an upward trend (that started last month) in November while declining slightly in China and North Asia. An improved picture emerged from Indonesia, on the heals of recovering domestic demand, while sentiment slipped in Hong Kong and remained unchanged in mainland China.

JETRO polls the companies to measure year-on-year changes, expressed as diffusion indices, in their business outlooks for the current month and the next two to three months going forward.

Overall current business sentiment for the five ASEAN countries included in the survey rose 1.0 point over the previous month in November, pushing the index to 3.0. By country, Thailand saw its index remain in negative territory for the third straight month (now at -20), mainly due to disruptions in the nation's distribution network from recent flooding. Gains were recorded in Malaysia, driven by strong overseas demand for semiconductors and electric/electronics equipment, and Indonesia, on the back of improved performance in the country's petroleum/chemical/steel and metals sector and growing domestic demand for motorcycles.

Overall forward business sentiment for the ASEAN region was down slightly in November, with the index slipping 1.0 point to 3.0, underscoring concerns over a slowing US economy. By location, Indonesia stood out with a nearly 20-point rise in its forward sentiment index in November, led by an expected recovery in the nation's automobile parts and transportation machinery sectors.

Overall current business sentiment for China and North Asia was down in November, with the index falling 3.6 points over the previous month to 6.4. By location, Hong Kong recorded a 17.0-point drop to 0.7, due to depressed sentiment among firms in the country's electric/electronics equipment and petroleum/chemical/steel and metals sectors. Although the index for East China gained 7.4 points in November, the country's overall index fell 0.7 points to 25.9, as other regions in China recorded drops in this month's survey.

Overall forward business sentiment for China and North Asia was down 7.3 points in November, pushing the index into negative terrirory (now at -0.9), with China recording a sizeable 12.2-point drop in this month's survey.

A total of 717 replies were received in ASEAN countries (124 in Indonesia, 99 in Malaysia, 186 in the Philippines, 208 in Singapore and 100 in Thailand); 197 in China (39 in the North, 49 in the Northeast, 72 in the East and 37 in the South); 132 in Hong Kong; 38 in the ROK and 103 in Taiwan.

JETRO, in cooperation with Japan's Ministry of Economy, Trade and Industry , has been conducting the survey in the first week of every month since June 2001 in the five major ASEAN countries, since June 2002 in South China, Hong Kong and Taiwan, since July 2002 in North and East China, and since October 2002 in the ROK and Northeast China. Results for the ROK are broken down into manufacturing and non-manufacturing only, not by industry, and no breakdown is given for Northeast China due to the small numbers of companies surveyed in the region.

The aim of the survey is to provide up-to-date information on business conditions in the Asian economy to help companies develop more effective business strategies. Firms are asked to compare earnings prospects, supply and demand, inventory, sales prices and accounts receivable with the same period one year earlier. The current month and the following two to three months are evaluated separately in each question. Replies are limited to "better," "the same" or "worse", in comparison to the previous year. The diffusion index is the difference between the ratio of positive ("better") and negative ("worse") responses.

Current Business Sentiment

Business sentiment in November among Japanese companies operating in Asia showed the effects on ASEAN of improvement in Indonesia and other countries where domestic demand is on the way to recovery. The business situation in ASEAN as a whole continued to improve somewhat from the previous month. Although the situation in China remained generally the same, business sentiment in China and North Asia as a whole showed indications of a negative turn, compared to the previous month, due to the deteriorating outlook in Hong Kong.

ASEAN 5

The November DIs rose 1.0 point over the previous month for ASEAN as a whole (-4.0 in October to -3.0 in November). Looking at the DIs by country, we see that the outlook in Thailand remained in the negative range for the third consecutive month from September (-11.8 in October to -20.0 in November) due to interference with domestic physical distribution as a result of flood damage. Meanwhile, the DIs rose over the previous month in Malaysia (-17.5 in October to -10.1 in November), where overseas demand for semiconductors and other electric and electronic machinery was favorable, and in Indonesia (-29.2 in October to -19.3 in November), where oil, chemicals, steel, and metals improved due to rising market prices for non-ferrous metals, and domestic demand recovered in the motorcycle market and other sectors.

The DI outlook for two to three months ahead was lower than November for ASEAN as a whole, with a decline of 1.0 point (from -3.0 in November to -4.0). Concerns over a slowing U.S. economy are thought to be a background factor in this. Meanwhile, in Indonesia, automobile parts and other transportation machinery continued to show improvement. A significant improvement is anticipated with a 20.1 point rise over November (from -19.3 in November to 0.8).

China and North Asia

The November DIs showed a decline of 3.6 points over the previous month for China and North Asia as a whole, at 6.4 (10.0 in October to 6.4 in November). Looking by region, we see that Hong Kong declined by 17.0 points (17.7 in October to 0.7 in November), affected by the deteriorating trend in oil, chemicals, steel, and metals, in electric and electronic machinery, and so on. Although East China rose 7.4 points, other regions of China declined relative to the previous month, so that the figures for China as a whole declined by 0.7 points (26.6 in October to 25.9 in November).

The outlook DIs for two to three months ahead show a decline of 7.3 points for China and North Asia as a whole (from 6.4 in November to -0.9). China in particular is expected to show a double-digit drop by 12.2 points relative to November (from 25.9 in November to 13.7).

http://www.jetro.go.jp/en/news/releases/20061124747-news

About JETRO

The Japan External Trade Organization , or JETRO, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small- to medium-sized Japanese firms maximize their global export potential.

Source: JETRO

Contact:

Public Relations Division
Administrative Affairs Department
Japan External Trade Organization (JETRO)
Phone: [phone]
Fax:  [phone]
http://www.jetro.go.jp

ASEAN region
Mr. Ryoichi Ito
Asia and Oceania Division Overseas Research Dept.
Phone: [phone]

China and North Asia region
Mr. Minoru Arahata
Mr. Kenji Shimizu
China and North Asia DivisionOverseas Research Dept.
Phone: [phone]

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