Australian CFOs in the pits over China

Confidence among chief financial officers (CFO) is the lowest it has been since 2009 according to the latest Deloitte Quarterly CFO survey, which found a profound drop-off in confidence over the last quarter. 

The net percentage of CFOs who felt more optimistic about their company’s future financial prospects dropped 35 per cent, from 24 per cent last quarter to -11 per cent. 

CFOs pinned this sentiment on the slow-down in China, with 85 per cent of CFOs citing it as a negative impact, up from 34 per cent last quarter. The survey mentioned Federal government policy uncertainty for the first time, Deloitte said.  

It is the highest level of pessimism since Deloitte began canvassing for the survey in 2009, according to chief operating officer Keith Skinner. He said while sentiment amongst CFOs around the globe was generally in line, it was the first time there had been significant divergence among Australia, the UK and North America. 

“The increasing pessimism amongst Australian CFOs is in stark contrast to those in the UK and North America who are enjoying their highest levels of confidence in recent years,” he said. 

UK CFOs recorded net optimism of 18 per cent off the back of subsiding worries about a Euro break-up and external macro risks, while US CFOs’ optimism increased from 32 per cent to 42 per cent, possibly due to emergence from a particularly weak period. 

Skinner said low interest rates and a depreciating Australian dollar had positive impacts on cash flow for Australian businesses; however confidence levels remained fragile as policy uncertainty and China weighed on local CFOs. 

“As things stand, UK and North American CFOs are taking far more comfort in the positive indicators in their domestic economies than their counterparts in Australia,” said Skinner.  

“As we switch from the investment period to the production period of the mining boom, it’s fair to say that local CFOs are apprehensive about what could be a very bumpy transition.”

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