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Malaysian businesses turning more upbeat, RAM says
KUALA LUMPUR: The negative sentiment among Malaysian businesses is possibly bottoming out, according to the latest RAM Business Confidence Index (RAM BCI).
The rating agency said on Wednesday the Corporate Index finally bucked the downtrend of the last few quarters to rise 3.2 points to 56.4 while the SME Index rose for the second consecutive time to 54.2 for 1Q-2Q 2020.
“The upturn in both indices is underpinned by broad-based improvements in the measured aspects and appear particularly strong in business performance indicators, ” it said.
RAM said the higher optimism follows consecutive quarters of weak business sentiment throughout 2019 amid global uncertainties.
Although most of of firms still cite “weak economic conditions” as their main challenge through the next six months (41.3% of corporates and 42.5% of SMEs), the percentage of firms that expressed this was lower than the all-time highs of 45.6% and 44.8%, respectively, in the preceding quarterly survey.
“This suggests slightly better business prospects heading into 2020. That said, the operating landscape is expected to remain bumpy, with a higher proportion of firms expecting ‘more competition’ as their main challenge (corporates: 20.8%; SMEs: 24.7%) in 1Q-2Q of 2020, ” it said.
RAM said the survey showed the more upbeat overall sentiment on 1Q-2Q of 2020 was stronger among export-oriented firms (corporates: +4.6 points; SMEs: +1.6 points) compared to their domestic-oriented counterparts (corporates: +3.0 points; SMEs: +0.9 points).
“However, domestic-centric firms appear to be more stable economic drivers as the volatile external environment have caused big swings in export-oriented firms’ business performance expectations in the past, ” it said.
Among the domestic-oriented sectors, the construction industry showed a consistently positive momentum in sentiment.
The overall Corporate construction index surged 3.6 points to 56.4 due to the anticipated revival of mega infrastructure projects in 2020.
Another domestic-oriented sector which showed a resiliently positive pace in sentiment was the retail sector. The index rose to the highest level on record of 53.5.
“The retail sector’s turnover and profitability sub-indices, which have been rising in the last four surveys, also indicate a promising turnaround after having languished below the neutral 50 mark through the first three quarters of 2019, ” RAM said.
The RAM Business Confidence Index is a comprehensive survey jointly conducted by RAM Holdings Bhd and Experian Information Services (Malaysia) Sdn Bhd, on business sentiment in Malaysia.
Released quarterly, the index is based on a survey of approximately 2,000 SMEs and corporates across five main SME and four main corporate industry segments.
Source: https://www.thestar.com.my/business/business-news/2020/01/08/malaysian-businesses-turning-more-upbeat-ram-says