23 Sep 2009 08:00

SEB's China Financial Index: Upward trend in China - North European companies bullish on increased profits

SEB's China Financial Index, addressed to around 50 subsidiaries of the largest Nordic and German companies, shows that local management in China are becoming increasingly confident that the Chinese economy has bottomed out and expect growth to accelerate in the short term. The index for September reached 62, up from 53 in March.
"China's massive stimulus package is having an obvious impact on business prospects for Swedish and other north European companies in Sweden. Regardless if one believes in Chinese official statistics or not, companies are obviously seeing a considerably stronger business climate and increased profits", says Fredrik Hähnel, Client Executive at SEB Shanghai and author of the report. "Exports from China to the US- and European markets are down for most of the companies, but the domestic market has proven more resilient", says Hähnel.
China is also gaining importance relative to other markets.
"China's economy grew by 7.9 percent in the third quarter and few economists believe that China will not reach its goal of 8 percent growth for the full year, while other major markets are expected to have negative growth for the full year", says Hähnel.
The survey also shows that no company is planning to scale down either by divesting or decreasing staff in China. On the contrary, half of the companies are already planning further recruitments. There is a slight decrease in investment plans since the last survey however.
"Investment decisions are taken at headquarters where sentiment is less positive than locally in China. Many companies are still in a 'wait and see' mode, and there is probably a lag before improved market sentiments in China also lead to an upturn in investments. Should the positive movements in China remain we are likely to see increased investments during 2009", Hähnel concludes.
This is the second publication of SEB's China Financial Index, a unique semi-annual survey with the purpose to reflect changes of sentiment in among large Nordic and German companies in China, and to facilitate of economic and financial trends in the market. The survey comprises a total of 11 questions covering areas such as business climate, profit expectations, investment plans and views of currencies and interest rates. The full report is available at: www.sebgroup.com\press.
For further information, please contact:
Fredrik Hähnel, Client Responsible, SEB in China, +86 138 1680 99 77
Press contact: Elisabeth Lennhede, +46 70 763 99 16, Elisabeth.lennhede@seb.se