BENGALURU, June 22 (Reuters) - Business sentiment at Asia-Pacific's biggest companies rose in the second quarter of 2016 to its highest in a year, but firms were wary about risks stemming from rising corporate debt in China and volatile oil prices, a Thomson Reuters/INSEAD survey showed.
The Thomson Reuters/INSEAD Asian Business Sentiment Index .TRIABS RACSI , representing the six-month outlook at 139 firms, was 67 for April-June versus 65 three months prior.
Companies in the Philippines were the most upbeat followed by those in India and China. Japan was the only economy with a sentiment subindex below 50 - the level separating optimists from pessimists.
PHILIPPINES: FOURTH TIME MOST UPBEAT AT 86 IN Q2 VS 85 IN Q1
Boosted by first-quarter economic growth that beat market expectations, nine of 11 firms polled said they had a positive outlook for the coming six months, while one was neutral and another negative.
Metropolitan Bank and Trust Co MBT.PS , Nickel Asia Corp NIKL.PS and San Miguel Corp SMC.PS featured among the 11 firms, which said chief risks to six-month outlooks included rising competition and slowing Chinese economic growth.
Seven firms also reported higher sales and orders over the past three months with four taking on more staff.
INDIA: LOW OIL PRICES, FOREX WORRY PULL SUBINDEX TO 78 VS 83
Seventeen of 25 Indian firms expressed optimism for the coming half-year whereas five were neutral and three pessimistic. But the subindex fell 5 points to 78, with volatile oil prices topping the list of outlook risks, while excessive foreign exchange volatility was also a concern.
Of the respondents, which included Hero MotoCorp Ltd HROM.NS and Reliance Industries Ltd RELI.NS , 15 said they enjoyed increased business compared with three months prior. Nine reported improved asset quality, and seven added headcount.
CHINA: OPTIMISM RISES TO 75 VS 71, VARIED RISKS CITED
Five of eight respondents were upbeat about the second half of 2016 while two were neutral and one negative. The primary risk factors that companies highlighted varied, with government policies, yuan depreciation and terrorism featuring among concerns.
China Jo Jo Drugstores Inc CJJD.O was one of the respondents.
Two firms booked more business over the past three months and two saw improvement in the quality of assets. Three said they had added headcount.
INDONESIA: SURVEY'S STEEPEST UPTURN IN SENTIMENT AT 64 VS 42
Fourteen companies from Indonesia responded to the survey, including PT Cowell Development Tbk COWL.JK , PT Hanson International Tbk MYRX.JK and PT Kalbe Farma Tbk KLBF.JK .
Overall, sentiment was far more bullish compared with three months previously, with eight companies reporting a positive outlook, two neutral and four negative. Key risks included currency swings and low energy prices.
Though sentiment turned bullish, activity over the quarter reflected the negative outlook of the previous survey: Staffing and asset quality are largely unchanged from three months prior, while eight companies reported a decline in business volume.
JAPAN: SURVEY'S MOST PESSIMISTIC WITH SUBINDEX AT 46 VS 77
Sentiment fell the most this survey in Japan, where firms said they were worried about stagnating consumption and exchange rate fluctuation.
Eleven of 12 respondents were neutral towards the coming six months and one was negative.
Business volume, asset quality and staffing levels were almost unchanged compared with three months prior.
INCREASED OPTIMISM
Elsewhere, South Korea and Taiwan recorded their highest number of positive responses. In Korea, 6 of 11 companies were optimistic about the coming six months, taking the economy's subindex to 73 from 70. In Taiwan, 5 positive responses out of 11 helped the economy's subindex swing to 64 from 44.
Sentiment rose in Australia to 69 from 63, reached a two-year high in Singapore at 63 from 50, and swung positive in Malaysia to 55 from 45. Sentiment was also positive in Thailand, though its subindex fell to 59 from 67.
Note: Companies surveyed change from quarter to quarter.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Main story
Highlights by sector
PDF of survey
http://tmsnrt.rs/28IB1Kk Graphic: Business sentiment index
http://tmsnrt.rs/1Qec4uG Graphic: Biggest perceived risks
http://tmsnrt.rs/1QebWeT Graphic: Outlook by economy
http://tmsnrt.rs/1Uxuw24 Graphic: Outlook by sector
http://tmsnrt.rs/1UxuFT3 Advisory
(Writing by Anu Bararia; Editing by Christopher Cushing)