RAM broadly positive on business prospects for the second half
KUALA LUMPUR: RAM Rating Services Bhd is broadly positive on business prospects for the third and fourth quarter ( 3Q to 4Q) of 2017, based on its third successive positive sentiment reading of the survey- based RAM Business Confidence Index.
“Small and Medium Enterprises ( SMEs) sentiment rose to 54.0 from 52.1 while corporate sentiment likewise stayed positive at 55.3, albeit, dipping slightly from 55.8,” it said.
Meanwhile, across the board, export- oriented businesses continued to register higher index values, in contrast with domesticoriented firms, the rating agency said in a statement yesterday.
“This is consistent with the strong momentum in trade activity, evidenced by seven consecutive months of double- digit export growth between December 2016 and June 2017,” it said.
Within the corporate segment, the agriculture/mining sector recorded the highest and most improved index reading of 57.6, largely driven by positive hiring and business expansion intentions, consistent with the recovery trend in the oil palm sector.
As for SMEs, the business services sector was once again the most sanguine with a reading of 56.4 while the retail sector was the least positive at 51.6, primarily due to the weak outlook on retail spending which had persisted from the previous survey, said RAM Rating.
“Across the board, businesses indicated a higher likelihood of undertaking business expansion, increasing hiring and greater capacity utilisation,” it said.
Nevertheless, RAM Rating said headwinds to the pace of profitability growth in the next six months was again a key concern for all firms surveyed, as they continued to be wedged between the rising cost of production and sluggish demand conditions.
Meanwhile, it said, the corporate sector expect a build-up in inventory – which would compel firms to price their products competitively – and a higher production cost to exert pressure on margins, going forward.
Of the sectors surveyed for the index, the retail sector remained the most cautious about its performance in the next six months, given prudent consumer spending on discretionary items, it said. — Bernama
Small and Medium Enterprises (SMEs) sentiment rose to 54.0 from 52.1 while corporate sentiment likewise stayed positive at 55.3, albeit, dipping slightly from 55.8. RAM Business Confidence Index