The survey in which 97 firms rated their six-month outlook resulted in a Thomson Reuters/INSEAD Asian Business Sentiment Index of 65 for March from 58 in December. A reading over 50 indicates a positive view.
The companies ranked a decline in Chinese demand as the primary risk to their outlooks, followed by excessive foreign exchange volatility and falling oil prices. Yet readings across the region revealed the biggest increase in confidence among firms in China itself and chief trading partners such as Singapore.
"The index is not an amazingly great number but it tells us there is certainly less pessimism now than in previous surveys," said Singapore-based economics professor Antonio Fatas at global business school INSEAD.
"People are digesting the economic slowdown in China and are being more optimistic and looking for opportunities rather than being alarmist, and that shows up in the numbers around the region, particularly Singapore," he said.
The Southeast Asian city-state registered the quarter's steepest rise in sentiment at 29 points, resulting in a neutral subindex at 50 after two deeply pessimistic quarters. In its top trading partner China, sentiment rose 21 points to 71.
Latest government data showed improving economic conditions in China, with fixed-asset investment increasing and capital outflows moderating, top officials said. The government also said it is aiming for economic growth of as much as 7 percent in 2016, after 6.9 percent in 2015 - the slowest rate in 25 years.
Too soon to cheer
China's outlook is crucial in a region where every economy counts China among its top three trading partners. But while economic improvement helped overall sentiment rebound, subindexes were still below the 50 mark in Malaysia, Taiwan and Indonesia.
Sentiment fell the most in Indonesia, by 23 points to 42, in a quarter when the central bank of Southeast Asia's biggest economy lowered interest rates three times to stimulate growth.
Stimulus measures by central banks elsewhere, from Japan to Europe, encouraged investment in the more risky assets during the survey's polling. But, on the whole, corporate executives remained wary about the broader health of the global economy.
"I think it is still too soon to say the world economy has turned a corner as the United States is still not raising interest rates despite an ongoing recovery - which tells me how fragile sentiment is," said Edward Yip, corporate affairs general manager at Malaysian survey respondent Kossan Rubber Industries Bhd, which makes medical gloves.
"We need to see two sustained quarters of rebound before drawing that conclusion."
Financial pessimism
Companies in the Philippines were the most optimistic for the third consecutive survey, with that subindex rising to 85 from 77 three months earlier.
By sector, recovery in sentiment was most prominent among eight household, food and beverage companies, where the subindex jumped to a record high of 100 from 50.
At the other end of the scale, 15 financial institutions including China Pacific Insurance Group Co Ltd and PT Bank Rakyat Indonesia (Persero) Tbk combined to log the only pessimistic subindex of 47, falling from 50.
Thomson Reuters and INSEAD polled companies from March 7-19. Of 97 respondents, 41 percent rated their six-month outlook as positive, 48 percent were neutral and 11 percent were negative.
Respondents this quarter included Australia's Stockland Corp Ltd, India's Hero MotoCorp Ltd, Japan's Hitachi Ltd and Fast Retailing Co Ltd, Korea Aerospace Industries Ltd, the Philippines' Energy Development Corp and Taiwan's Far EasTone Telecommunications Co Ltd. - Reuters