China slowdown a concern for Australian CFOs
Concerns about China’s economic slowdown are weighing on the minds of Australia’s chief financial officers.
Deloittes’ latest survey of 22 CFOs from major Australian listed companies has found confidence in the local economy has plateaued.
The majority of CFOs (68 per cent) said they felt the Chinese economy had hurt confidence.
Deloitte managing partner for Sydney Dennis Krallis said news regarding slower growth coming out of China, and its scale and relevance to Australia, appeared to be hitting a nerve.
“Commodity prices continue to weigh on CFO optimism amid rising supply and falling demand from China, the world’s biggest commodity consumer,” Krallis said.
However, he said low interest rates, a weak Australian dollar and Canberra’s leadership change had helped temper the China impact.
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He said for the first time since early 2014, the quarterly CFO survey had ranked federal government policy as a positive influence in line with the widely held perception that Prime Minister Malcolm Turnbull and his government were more open to tax reform and innovative policy.
However, the number of CFOs who felt now was a good time to take on risk had almost halved since the first quarter of 2015, to 27 per cent.
Bank borrowing remains the preferred source of funding, while equity and corporate debt issuance are now markedly less attractive among CFOs.
Krallis said this suggests strong credit conditions were now not sufficient to offset CFO concerns regarding the future of the Australian economy.
AAP
