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Possibility of slowdown is a worry for CFOs

02-22-2012 11:03 BJT

BEIJING - Chief financial officers in Asia consider the possibility of an economic slowdown in China to be the third most concerning issue in the world, according to a recent report by Bank of America Merrill Lynch.

That prospect figures in a ranking of those executives' major causes of worry just behind the European debt crisis and the US budget deficit, the report said.

The report was compiled from a survey conducted among 465 CFOs from companies with more than $500 million in sales revenue a year from seven Asia-Pacific economies - Australia, Chinese mainland, Hong Kong, India, Japan, South Korea and Singapore. Of them, 75 CFOs came from the Chinese mainland and 50 from Hong Kong.

The report said the prospect of an economic slowdown in China is of great concern throughout Asia.

On a 10-point scale on which a 1 indicated the absence of all concerns and a 10 the existence of great concerns, that possibility garnered an average score of 6.9. As could be expected, Chinese CFOs gave the possibility of an economic slowdown a grade of 8.1. But they weren't the only ones worried; CFOs in Australia produced a score of 7.8 and those in Hong Kong of 7.5.

"These two economies (Australia and Hong Kong) are highly influenced by growth in the Chinese mainland," said Huang Xiaoguang, president of Bank of America NA China. "The Australian mining industry is dependent on Chinese demand, while Hong Kong re-exports products that are 'made in China' and provides financial services to the Chinese mainland."

Despite the uncertain prospects, CFOs in the Chinese mainland expressed the greatest confidence in the Chinese economy, giving it an average score of 7.5 for 2012 on a scale on which 10 was the highest rating possible. That was significantly higher than the average score of 5.9 given to Asia as a whole.

CFOs in the Chinese mainland continue to concentrate on growth. More than half of the CFOs surveyed were looking to increase capital expenditure in 2012 - the highest ratio among all of the economies surveyed - and 72 percent were considering raising money to pay for domestic expansions, according to the report.

Among the CFOs from the Chinese mainland who were surveyed, 86 percent said they plan to pursue mergers and acquisitions in China, while some of them are looking to expand into other countries, Huang said."We saw some successful examples of Chinese enterprises going abroad to merge or acquire foreign assets, but most of the Chinese CFOs we surveyed prefer to concentrate the Chinese market," Huang said.

Editor:Zhang Jianfeng |Source: China Daily

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