Singapore, September 23, 2015 -- Moody's Investors Service says that most of the non-Chinese,
non-financial corporates it rates in Asia Pacific can withstand
the impact from China's GDP slowdown, supported by their businesses
outside of China and existing financial cushions.
Most exposed to China are corporates in the metals and mining, coal,
oil & gas, steel, chemical, auto, technology
and agriculture sectors, says Moody's.
"The metals and mining sectors are the most exposed to weaker Chinese
demand, in terms of export volumes and the knock-on effect
of lower prices," says Vikas Halan, a Moody's
Vice President and Senior Credit Officer.
"The coal, oil and gas, steel, and chemical sectors
also have indirect exposure via the impact of weaker demand on prices,"
adds Halan. "And slowing Chinese demand will pressure revenues
for auto and semiconductor manufacturers."
Moody's conclusions were contained in its just-released report
"APAC Non-Financial, Non-Chinese Corporates:
Most Rated Companies Can Withstand Impact from China's GDP Slowdown".
Moody's report groups sectors in the region into three categories
based on the proportion of rated companies with revenue exposure to China.
The report excludes companies based in China and those that conduct nearly
all of their operations in China.
Corporates with modest revenue exposure to China are those in the business
and consumer services, gaming, manufacturing, port,
real estate, retail, shipping and trading sectors, says
Moody's.
And exposure is low for airports, and the homebuilding and building
materials, telecommunications and utility sectors, as the
companies in these sectors tend to derive most of their revenues from
the countries in which they operate.
Overall, Moody's expects limited impact on the non-Chinese,
non-financial corporates it rates in Asia Pacific, as most
have financial cushions to absorb any weakening of their credit quality
that results from a slowdown or decline in revenues.
In addition, many of the exposed companies will receive revenue
support from their businesses outside China.
Moody's has slightly revised its GDP growth forecast for China in
2016 to 6.3% and maintained its forecast of 6.8%
for 2015. In subsequent years, the growth is likely to slow
towards 6.0%, says Moody's.
While this represent a significant slowdown over prior years, the
growth rate remains well ahead of most other developed countries,
and further policy support is likely to ensure that the economic slowdown
remains gradual.
Moody's report is one of a series of three reports analyzing non-financial
companies' exposure to China and the potential impact on these companies
from China's slowing economic growth. The other reports cover
companies in EMEA and the Americas.
Subscribers can access the report here: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1008251
Moody's offers complimentary access to its new topic page,
China -- Reform and Rebalancing, a centralized source for Moody's
research related to key credit issues in China as the country's
rebalancing story unfolds. This report is part of Moody's ongoing
coverage on this theme. Register today at www.moodys.com/chinarebalancing
for access to all research on this page.
Recent Moody's publications relating to China Reform and Rebalancing include:
• Non-Property Companies - China: Revenue Growth
Will Remain Constrained Through 2016
• Inside Renminbi Bonds - September 2015
• Chinese Corporates: New Policy on Offshore Debt Issuance
Facilitates Offshore Fundraising for Chinese Companies
• Property Developers - China: 1H Results Show Signs
of Stabilization Amid China's Economic Slowdown
• State-Owned Enterprises (SOEs) -- China: Reform
Plan Will Support Credit Quality of Rated SOEs
• China Water Sector: Regulatory Reform Will Drive Infrastructure
Investment and Industry Consolidation
• Reinsurance Market in China -- Underlying Demand to Support
Growth Despite Slowing Economy
• China Securitization: Revolving Structure Sets Precedent
for SME Securitization by Chinese Banks
• Chinese Banks: 1H 2015 Results Show Rising Pressure on Operations
• Chinese Regional and Local Government Debt Update Shows Credit-Negative
Rise in Leverage
These reports are available at http://www.moodys.com/chinarebalancing.
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This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.
Vikas Halan
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
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Laura Acres
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Moody's: APAC (ex China) non-financial corporates can withstand China GDP slowdown