Most local CFOs expect to enjoy profit growth: survey
Most of the chief financial officers of Taiwan’s largest companies expect to see an increase in profits this year, according to a report released Thursday by Bank of America Merrill Lynch.
The level of confidence among CFOs in Taiwan is the second highest in the Asia Pacific region after Indonesia, Merrill Lynch said in its 2015 CFO Outlook Asia report.
The report was based on a survey among 630 CFOs and senior financial managers of big companies in 12 regional countries and areas, namely China, Japan, India, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Thailand, Taiwan, Australia and Hong Kong.
Nearly 97 percent of the companies have global annual revenues of at least US$500 million.
Wayne Liaw, chairman and managing director of Bank of America Merrill Lynch Securities Taiwan, said the optimism among Taiwan CFOs can be attributed to a steady growth of the economy, improving consumer confidence, and a gradual recovery of business confidence in a stable policy-making environment.
He said, however, that despite the high level of confidence among the Taiwan CFOs, there is still concern over political risk, as expressed by 83 percent of them, the highest percentage among all the Asian countries in the survey.
Taiwan CFOs, in particular, tend to increase their equity weighting on the balance sheet and build cash reserves, the report said, adding that 80 percent of them are planning this year to reserve more cash, compared with 67 percent last year.
On the other hand, not many Taiwan CFOs are interested in mergers and acquisitions, as indicated in the poll, which showed that only 17 percent of them plan to use company capital this year for such purposes, a steep drop from 33 percent last year, according to the report.
It said there is even less interest in applying for loans for mergers and acquisitions, with only 10 percent of Taiwan CFOs looking in that direction, compared with the average 26 percent among all Asian CFOs.
The Chinese market is still a focal point, the report said, adding that 60 percent of Taiwan CFOs plan to invest there, although they are closely observing the effects of China’s slowing economic growth and shifting policies.