The ThomsonReuters/INSEAD Asia Business Sentiment Index jumped to 74 in the second quarter from 64 in the first, the highest reading since the start of 2012. A reading above 50 indicates an overall positive outlook.
Leadership change gave India and Thailand sorely-needed shots in the arm, with the two key markets powering a rise in the wider index. Robust scores from China and Australia also helped lift the index with scores of 67 and 79 respectively, both up significantly from the previous quarter.
Export-driven South Korea saw a steep drop to 50 from 67 in the first quarter on weaker trade and consumer data. Japan and Malaysia edged down slightly, while Singapore and the Philippines held flat, although the Philippines still maintained its 100 reading, the same as in the first quarter.
"At the moment, stronger U.S. growth, China providing some support to prevent collapse and the India story is still there. These are positives," said Anthony Chan, senior economist for Asia at asset management firm AllianceBernstein.
However, the sentiment spike may be short-lived. India is due a "reality check" after its election boost, China's stimulus will create only a short-term lift, and there is still plenty hanging "in the balance" for Thailand after the military coup there in May, Chan said.
The index surveyed 200 of the Asia-Pacific region's top companies in 11 economies across sectors from property, to financials and tech. Companies included Japanese clothes maker Fast Retailing, Korea's Hyundai Heavy Industries and Australian construction materials firm James Hardie Industries Plc.
The poll, conducted by ThomsonReuters in association with INSEAD, a global management and business school, was compiled in June 2-13. It showed global economic worries, rising costs and other risks including political and regulatory uncertainty were the key business concerns.
Of the 124 companies that responded 52.42 percent said they had a neutral outlook and 47.58 percent said they had a positive outlook in the second quarter of 2014. None reported a negative outlook, the first time ever in the survey's history.
Positive trends for key trade partners gave Asia a boost, said Simon Shakesheff, Sydney-based group executive for strategy and stakeholder relations at Australian property group Stockland Corp Ltd.
"Business confidence has been buoyed by a broad improvement in the global environment, especially some increased optimism with regards to the outcome of Europe, the U.S. looking quite respectable and Japan travelling better than expected," he said.
Political changes around Asia sparked a positive mood in the countries affected with all 10 companies surveyed from India and the majority in Thailand reporting a positive outlook.
This helped Asia's third-largest economy hit the maximum score of 100 after pro-business candidate Narendra Modi stormed to victory in India's general election in May.
"India is positive because the previous government has done such a poor job that everyone expects it can only improve," said Dariusz Kowalczyk, Hong Kong-based senior economist for Asia ex-Japan at Credit Agricole, pointing to Modi's strong majority in parliament and wide popular support.
"This will make it easier for him to push through reform and therefore business sentiment improved."
A military coup in May helped Thailand, Southeast Asia's second-largest economy, rebound strongly to 91 after months of anti-government protests had dragged the country's score down to negative territory since the end of last year.
The army said it would end political unrest and revive the country's flagging economy, boosting business and consumer sentiment. Thai consumer confidence rebounded last month for the first time in over a year.
Corporate sentiment in Malaysia sank to 67 from 75 the quarter before while the Philippines held steady at the maximum score of 100. No companies from Indonesia responded to this quarter's survey.
China, Asia's largest economy, posted a score of 67, bouncing back from a score of 50 in the quarter before as Beijing's "mini-stimulus" package promised to help the country shift smoothly into slower gear and hit its growth targets for the year.
"The slowdown in China that we saw in Q1 has not extended into Q2 and things seem to have stabilised," said Julian Evans-Pritchard, China economist at Capital Economics.
"There's quite a lot of relief that the government has stepped in to shore up growth and offset some of the weakness that we've seen in the property sector."
RESOURCES UP, FINANCIALS DOWN
Region-wide, resources was the strongest sector with a reading of 80 marking a three-year high. The property sector was just behind, climbing to 79 from 75 the previous quarter.
The shipping, food and building sectors tied for third with readings of 75. In the building sector half of the companies reported a positive outlook, helping drive a steep rise from its score of 50 in the first quarter.
"Our main regions are currently experiencing strong housing construction markets," said Sean O'Sullivan, vice president of investor and media relations at James Hardie, pointing to relatively low interest rates, strong employment markets and robust broader economic conditions. The firm's key regions in Asia are Australia, New Zealand the Philippines.
The weakest sectors were financials and retail. Financials dropped to 60 from 64 the previous quarter, while rising costs dragged retail down to 69 from 75. Autos also posted a relatively weak score of 67, although this was up sharply from 50 in the first quarter.
Q2 Asian Business Sentiment Survey - by economy
Asia's top companies reported a bullish outlook in the second quarter of 2014 compared to the first three months despite worries over the global economy and rising costs, the latest ThomsonReuters/INSEAD Asia Business Sentiment Survey showed.
Of the 124 companies who responded to the poll, none reported a negative outlook for the first time in the survey's history. The ThomsonReuters/INSEAD Asia Business Sentiment Index rose significantly to 74 in the second quarter compared to a 64 reading in the first quarter.
A reading above 50 indicates an overall positive outlook.
AUSTRALIA: SIGNIFICANTLY BETTER (INDEX AT 79 VS 64 IN Q1)
Business confidence among companies in Australia recovered in the second quarter even as half the participants continued to worry about the global economy.
Of the 12 respondents, which included Stockland Corp and Oil Search, seven companies were positive while the rest remained neutral, an improvement over the last quarter where only two of seven companies were positive.
Five companies said their new orders increased while the same number said they hired more people. Close to a third of all companies surveyed have increased employment levels in the second quarter.
CHINA: RECOVERY (INDEX AT 67 VS 50 IN Q1)
Sentiment in China rebounded as a third of companies polled reported a positive outlook and 50 percent of the participants saw an increase in new orders and sales in the second quarter. Last quarter all eight respondents held a neutral outlook.
Nine of the 15 participants said global economic uncertainty was the top risk, a worry shared by more than 50 percent of 124 companies surveyed in the second quarter. A handful of Chinese firms are concerned about rising costs.
The world's second-largest economy is struggling to recover from an economic slowdown, exacerbated by a deterioration in the property market, despite government stimulus. This has pulled the sentiment index down from its peak of 95 in the first quarter of 2011.
INDIA: SENTIMENT SURGES (INDEX AT 100 VS 65 IN Q1)
Despite worries over the global economy, rising costs and volatility in exchange rates, Indian companies were the most optimistic with all 10 respondents reporting a positive outlook, a level last seen in the fourth quarter of 2012.
Nine companies said new orders and sales increased in the second quarter while employment levels rose for 60 percent of the respondents. Three companies said delays in payments from customers had declined.
A resounding election victory last month for pro-business leader Narendra Modi, with the mandate to steer the economy out of its current slump and create more jobs, has revived consumer confidence in Asia's third-largest economy.
JAPAN: SLIPS MARGINALLY (INDEX AT 56 VS 59 IN Q1)
Business sentiment in Japan weakened slightly with the global economic environment primarily weighing on corporate outlook.
Of the 16 respondents, which included Daiichi Sankyo Co Ltd , Canon Inc, Seven & I Holdings and NTT DoCoMo, 14 were neutral on the outlook and two positive, similar to the previous survey.
While risks associated with exchange rate volatility abated in the second quarter, a handful of companies continued to worry about rising costs. Fewer companies reported an increase in new orders and employment levels over the last quarter.
SOUTH KOREA: SIGNIFICANTLY LOWER (INDEX AT 50 VS 67 IN Q1)
Global economic uncertainty weighed on sentiment at South Korean companies with the economy's index falling to 50 in the second quarter from 67 last quarter.
All 19 respondents said their outlook was neutral with the majority concerned about the global economy while a handful were worried about rising costs. While half the respondents said new orders and sales increased, only three reported higher employment.
In the previous quarter a third of the companies had a positive outlook while the remaining six were neutral.
TAIWAN: SENTIMENT REBOUNDs (INDEX AT 67 VS 50 IN Q1)
Optimism returned to Taiwan's sentiment index, reversing the decline in the March quarter. Two of the six respondents turned positive in their outlook compared with none in the last survey.
Companies were concerned about the global economy, rising costs and exchange rate volatility. Two respondents lowered employment levels this quarter compared with steady levels last quarter while two companies reported an increase in orders, compared to just one in the previous quarter.
SOUTHEAST ASIA: MOSTLY STABLE, THAILAND RECOVERS (THAILAND AT 91; PHILIPPINES AT 100; SINGAPORE AT 67; MALAYSIA AT 67)
Sentiment among Southeast Asian businesses was mostly upbeat as Thailand recovered and with the exception of Malaysia, which slipped to 67 from 75 as rising costs and uncertain world economics continued to worry businesses in the region.
The business outlook in Thailand turned positive after two quarters of negative sentiment as political turmoil in the country eased. The index rose to 91 from 41 last quarter - the highest level since the first quarter of 2012 - as 12 of 16 companies saw an increase in new orders and sales. Worries over political stability, among other things, remained.
The Philippines, along with India, was the most optimistic with all 15 respondents showing a positive outlook which remained unchanged at 100. Two-thirds of the respondents reported higher employment levels while almost all saw an increase in new orders and sales.
The sentiment index among companies in Singapore remained unchanged at 67 with two of six respondents showing a positive outlook and the rest remaining neutral. Only three of six companies said new orders and sales increased this quarter compared with eight of nine respondents last quarter.
There were no responses from Indonesia, the region's biggest economy.