BUSINESS sentiment among Asia’s top companies fell sharply in the third quarter, weighed down by worries about China’s slowing economy, a possible end to the U.S. Federal Reserve’s stimulus policy and a decline in the outlook for regional economic hubs like Singapore, a ThomsonReuters/INSEAD survey showed.

    The ThomsonReuters/INSEAD Asia Business Sentiment Index fell to 66 in the third quarter from 74 in the previous quarter, its steepest decline in three years. A reading above 50 indicates an overall positive outlook.

    Companies in India were the most positive with a maximum score of 100 for the second consecutive quarter after pro-business leader Narendra Modi was elected prime minister.

    In contrast, Taiwanese businesses were the most negative, with a score of 33.

    “While growth is still robust across Asia, businesses are grappling with a number of challenges, including worries about rising interest rates as the Fed begins to press the brakes,” said Frederic Neumann, the Hong Kong-based co-head of Asian economic research at HSBC.

    He also said business conditions in China had become more uncertain amid a softening real estate market.

    Chinese companies polled were neutral about their prospects, which led China’s score in the third quarter to drop to 50 from 67. China’s economy is expected to grow 7.3 percent this year, its weakest pace in 24 years, a Reuters poll of analysts shows.

    Singapore also turned in a third-quarter reading of 50, a sharp drop from the previous quarter’s score of 67.

    The index surveyed 200 of the Asia-Pacific region’s top companies in 11 economies across sectors, including financials, property, resources and technology.

    Companies participating in the survey included Australian construction materials firm James Hardie Industries Plc.., Japan’s Fast Retailing Co. and Indian drugmaker Lupin Ltd., among others.

    The poll, conducted by ThomsonReuters in association with INSEAD, a global management and business school, was compiled from Sept. 1-12.

    It showed global economic worries, rising costs and other risks, including currency volatility and regulatory uncertainty, were the key business concerns.

    Of the 120 companies that responded, 64 percent reported a neutral outlook, while 34 percent said they had a positive outlook and 1.67 percent were negative.

    Business sentiment in the key Asian economies of India and Thailand benefitted from political change.

    In India, Prime Minister Modi’s election has helped lift the stock market to record highs while the end of months of political unrest in Thailand and the establishment of a military government has eased businesses concerns.

    All 15 Indian firms surveyed were positive about their outlook. Thailand was the second-most positive, with a score of 90.

    “One hundred-plus days into the Modi government and sentiment seem to be improving, albeit gradually,” said Girish Vanvari, co-head of tax at KPMG in India. “We are certainly in for a period of gradual sustainable growth.”

    Indian drugmaker Lupin also said it was positive about the domestic business environment.(SD-Agencies)