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A joint survey effort between Duke University and CFO Magazine

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1 A joint survey effort between Duke University and CFO Magazine
Asian Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University and CFO Magazine

2 Top Concerns of Asian CFOs
1. Economic Uncertainty 2. Difficulty attracting qualified employees 3. Government policies 4. Regulatory requirements 5. Employee productivity 6. Currency risk 7. Weak demand for product/services 8. Access to capital 9. Rising input or commodity costs 10. Data security

3 Business Optimism Index
The Asian Optimism Index saw a resurgence in Q4, propelled by a positive macro sentiment in China and sustained optimism among Indian and Chinese CFOs about their own firms Global Trends Dec 2017 Outlook Sep 2017 Outlook Country Business Optimism Index Country / Region Country / Region Own-Firm Business Optimism Index Within Asia itself, there’s a varying level of business optimism. China & India CFOs seem most optimistic. CFOs are relatively optimistic about the future of their own firms in Asia. Own firm-optimism is highest in China, India and then Australia. CFOs in Japan and Singapore are less optimistic. Own Company Own Company Notes: Presented data are the mean value for each region or country, Scale from 0-100

4 Expected Product Price Inflation
Asian inflation outlook continues to rise, boosted by expectations in China and Japan Sep 2017 Outlook Global Trends Dec 2017 Outlook Product Prices Product Prices 17q4: India using median, mean=-7.9% Inflation expectations in Asia have seen the largest increase as compared to other regions United States, Europe, and Latin America have stable inflation expectations Africa continues to have the highest inflation expectations, but Latin America and Asia are close behind Inflation expectations rise across some Asian countries, including China and Japan Within Asia, CFOs in China and Japan continue to expect product price inflation to rise, while in Singapore, expectations are that prices will remain flat Notes: Presented data are the mean or median values for each region or country.

5 Expected Growth in Sales Revenue
CFOs in Asia are optimistic about expected sales growth Sep 2017 Outlook Global Trends Dec 2017 Outlook Revenue Revenue Dec 2017: India already using median, mean = -0.4% Revenue growth expectations in Asia have risen to match levels from a year ago After a few quarters with moderate growth expectations, CFOs in Asia are expecting higher levels of revenue growth next year Africa expects the highest price increases in 2018 Growth outlook is strong across Asian countries, particularly in China and Singapore China leads Asian countries, with an expected growth outlook of 8.7% India and Japan are expected to see growth rates of 5%+, at 6.6% and 5.6% respectively Notes: Presented data are the mean or median values for each region or country.

6 Capital Spending Plans
Asian capital spending projections strong, with higher levels in Japan and India being offset by lower levels in China Sep 2017 Outlook Global Trends Dec 2017 Outlook Capital Spending Capital Spending 17q4: Japan using mean, median = 21.0% Indian use unweighted median Capital spending in Asia continues to be high relative to other regions Asian CFOs expect capital spending to increase around 8% Latin America continues to trend towards business expansion, while CFOs in the United States, Europe, and Africa are scaling back capital spending Capital spend mix in Asia changes, with Japan and India investing more and China scaling back Leading Asian economies expect capital expenditures to grow In China, expectations have fallen to 2% but capital spending is expected to increase 8%-10% in Japan and India Notes: Presented data are the mean or median values for each region or country.

7 Expected Change in Earnings
Earnings growth in Asia is led by India but overall continues to be the lowest compared to other regions Sep 2017 Outlook Global Trends Dec 2017 Outlook Earnings Earnings 17q4: China using median, mean = -3% Indian using mean, median=15.7% Outlook less positive for Asia and United States Asian earnings outlook remains weak compared to other regions Latin America earnings expectations shot up and now leads other regions, building off a very low base Earnings growth outlook positive in Asia but weaker in most economies, except India Most of the Asian economies anticipate lower earnings outlook compared to last quarter, with China moving into the negative territory. However, India continues to march on and expect higher q-o-q growth rates Notes: Presented data are the mean or median values for each region or country.

8 Fulltime Employment Outlook
Asia and LatAm CFOs expect muted fulltime employment, while all other regions’ CFOs expect moderate employment growth Sep 2017 Outlook Global Trends Dec 2017 Outlook # FT Employees # FT Employees 17Q4: India using median, mean=-4.2% Employment outlook in Asia reverses trend but still near zero CFOs in Europe, Africa and Asia are optimistic about the employment picking up from near-zero growth last quarter FTE rate outlook in Latin America and US have softened from last quarter India and Japan lead employment growth in among major Asian economies China, Japan and India all expect positive growth in fulltime employment, however are expected to have lower growth compared to European and US economies Indian’s growth outlook reverses from negative to positive from the previous quarter Notes: Presented data are the mean value for each region or country | #FT=Number of Fulltime Employees

9 Expected Wage and Salary Increases
Asian wages and salaries are projected to be lowest among all the regions for successive quarters Sep 2017 Outlook Global Trends Dec 2017 Outlook Wages & Salaries Wages & Salaries 17q3: All using mean Median: China =8.23 Japan = 0.61 India = 10.00 Wage growth spread widens across regions Wage growth outlook is the highest for the Africa at 8% and lowest for Asia at 1.1% Asia’s wage growth has been declining for the past 4 quarters from its peak of 6.6% to 1.1% this quarter Africa expects the greatest uptick in wage growth q-o-q across regions China’s wage growth remains positive but saw major decline q-o-q China’s wage growth outlook has decreased for successive quarters from 9.1% to 6.6% and now a flat 0.4% growth Wages in Japan are expected to be marginally positive this quarter compared to flat growth last quarter Notes: Presented data are the mean or median values for each region or country.

10 Work-Life Balance Please indicate your work-life balance. That is, during the time you are awake, the percentage of time, energy, and attention focused on work versus the percentage of time, energy, and attention focused on life outside of work.

11 Work-Life Balance Ideal Work-Life Balance
Almost all CFOs would prefer to work fewer hours Ideal Work-Life Balance Current Work-Life Balance 80% work - 20% life 70% work - 30% life 60% work - 40% life 50% work - 50% life 40% work - 60% life 3.7% 30.6% 51.5% 14.2% 0.0% 5.6% 4.0% 31.5% 51.6% 7.3% 38.9% 47.2% 13.9% 72.8% 27.2%

12 Work-Life Balance – By Compensation Type
The percentage of time, energy, and attention focused on work is highest when compensation increases the most in response to good corporate performance.

13 Work-Life Balance – By Age
The percentage of time, energy, and attention focused on work by CFOs gradually increases and then steadies with age.

14 Work-Life Balance – Around the World
CFOs everywhere work long hours

15 Crowding Out Long-term Corporate Investment
Check if spending on the following items “crowds out” or hinders your firm's ability to spend on long-term corporate investment.

16 Crowding Out Long-term Corporate Investment
Check if spending on the following items “crowds out” or hinders your firm's ability to spend on long-term corporate investment.

17 Faster Pace of Change/Innovation
Has the faster pace of change/innovation… changed overall capital spending by your firm? changed research and development spending by your firm? changed your willingness to take on “moon shot” projects? Did not exclude DK

18 Faster Pace of Change/Innovation
Has the faster pace of change/innovation… Did not exclude DK

19 CFO as Decision-Maker At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

20 CFO as Decision-Maker – Compensation Type
At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

21 CFO as Decision-Maker – by CFO Age
At your firm, for which decisions is the CFO one of the two or three most important decision-makers? Did not exclude DK

22 Return on Assets (ROA) Return on Assets in Asia is expected to be among the lowest relative to other regions, led by Africa March 2017: Argentina too high: 21.1 & 23.3 Return on assets are expected to rise across all regions, relative to 2017 Regional ROAs expected to increase by 1% to 3% in 2018 versus 2017 CFOs in most Asian countries expect ROA to be the same or higher in 2018 relative to 2017 CFOs in Japan expect the highest ROA in 2018 followed by China and India among Asian countries

23 A joint survey effort between Duke University and CFO Magazine
Asian Business Outlook Part of the Global Business Outlook A joint survey effort between Duke University and CFO Magazine

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