The rising corporate confidence of Chinese companies is fuelling investment, according to Fidelity International’s 2018 Global Survey.
Also, the Chinese companies were more confident than they had been at any point in the last five years, according to the study which served as a barometer of company sentiment based on the views of 143 analysts.
Furthermore, the companies both global and Chinese were not expecting the end of the cycle nor a “hard landing” in China.
Fidelity international’s investment director, equities, Catherine Yeung said: “For the first time in four years, expectations for new capex spending in China have turned positive. Management teams across a wide swathe are shifting from maintenance to growth capex, reflecting the drive to innovate and upgrade domestic value chains.”
“But challenges remain. Wages continue to rise, driven by China’s rising affluence, aging population, and shrinking workforce. 86 per cent of China-focused analysts expect their companies to raise wages this year. In contrast, 72 per cent of all analysts globally expect companies to increase salaries,” she said.
However, as far as Japan was concerned, companies were particularly bullish about prospects for the year ahead, with the country’s sentiment reading at 7.0 out of 10, higher than any country or region in this year’s survey, the firm said.
Fidelity’s Sentiment Indicator for China rose to 6.4 out of 10, up from 5.7 last year and a low of 4.1 in 2016.
Looking beyond China and Japan, there was notable sequential improvement in corporate confidence across the region, which stretched from Australia to India.
The Asia Pacific ex Japan and China Sentiment Indicator stood at 6.2, compared to 5.7 last year and a low of 5.0 in 2016.