SEB's China Financial Index - North European co...

China's monetary tightening combined with concerns about slower global growth
impacting the Chinese economy have made senior managers of North European
subsidiaries in China less optimistic about the market prospects and profit
expectations on the previously red hot Chinese market. SEB's China Financial
Index fell to 63.4 in September from 70 in the last report published in March.

Although the pace of expansion in China has fallen slightly, over half of the
companies that responded to SEB's survey plan for further investments and one
out of four is planning significant investments in the coming six months. Eight
out of ten companies plan to increase staff in the country although the number
of companies planning significant recruitments has fallen significantly from our
last survey. Lower customer demand is the main concern followed by skilled labor
shortage and high raw material costs.

The Chinese economy grew by 9.6 percent in the first six months of 2011 and
China continues to outperform all other major markets in the world. The central
bank has continued to raise interest rates and limited new bank loans in order
to prevent a housing bubble and curb high inflation. The combination of
continued monetary tightening and increased concern over how the faltering the
global economy will impact China makes large North European companies more
cautious in terms of sales and profit expectations in China. Only 48 percent of
companies have a positive or very positive view on market prospects in the
coming six months as compared to 80 percent six months ago. Less than half of
companies foresee growing profits, down from two out of three in the last
survey.

"We don't see falling volumes in our own business and anecdotal evidence from
our clients point at continued positivism. But it goes without saying that the
Chinese government's tightening measures in combination with a slowing world
economy will have an impact on the economic climate in China", says Fredrik
Hähnel, Head of SEB in Shanghai.

The survey was carried out 25 August- 2 September, and shows that North European
companies continue to expand in China even though the number of companies
planning significant increased investments has fallen.

"It's natural that companies get more cautious when the economic outlook is less
stable. Still, four out of five companies plan for continued investments and
recruitments in the country"

"How the current global economic turbulence will filter through to the Chinese
economy remains to be seen but SEB forecasts that China will experience 8.4
percent growth in 2012" continues Hähnel who also notes that faltering domestic
demand is back as the main concern. "More than one out of four companies view
lower demand as their main concern but this is still far better than the level
we saw in 2009, directly after the financial crisis when over 70 percent were
worried about falling demand. Difficulties to recruit competent staff and high
raw material costs are the second and third largest concerns", Hähnel concludes.

This is the sixth time SEB publishes the China Financial Index, a unique survey
published semi-annually. The purpose is to mirror changes in expectations among
North European companies in China, in order to facilitate the understanding of
the economic and financial development in the country. The survey includes 12
questions related to the business climate, investment plans, recruitment plans
and the view of currencies and interest rates. The full report can be downloaded
from:  www.sebgroup.com\press.

 For further information, please contact   Press contact
 Fredrik Hähnel, head SEB in Shanghai      Elisabeth Lennhede
 [phone]                        [phone]
 [e-mail]                     [e-mail]
                                           



Press release PDF: 


http://hugin.info/1208/R/1544385/473293.pdf

Fredrik Hähnel: 


http://hugin.info/1208/R/1544385/473295.JPG

China Financial Index September 2011: 


http://hugin.info/1208/R/1544385/473294.pdf




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