(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Sept. 17, 2012--A further slowdown in the global economy and, to a lesser extent, a disruption in refinancing are the major risks facing Asia-Pacific companies. That's according to a Credit FAQ, titled "Top 10 Investor Questions: Asia-Pacific Corporates," that Standard & Poor's Ratings Services published recently.
"A major negative surprise from eurozone could disrupt global financial markets and hurt Asia-Pacific companies. China's current economic slowdown is also affecting export growth," said Standard & Poor's credit analyst Jaemin Kwon.
Standard & Poor's observes that the capital goods, home building, and metals sectors are likely to find the market conditions toughest in 2013.
"Our negative outlooks for sectors such as home building, metals, and mining are largely due to cyclical reasons. However, exogenous factors such as the eurozone crisis and a slow recovery in the U.S. could cause a deeper downturn than normal," said Mr. Kwon.
A potential hard landing in China could keep profitability of the steel sector low over the next year. Aluminum companies in the country are also facing overcapacity, but they are more likely to curtail production when demand weakens. Companies in Korea, Taiwan, Hong Kong, and Australia also face some risk of an immediate negative impact.
The report notes that default rates for Asia-Pacific companies are likely to go up, but they are unlikely to rise to the levels that Standard & Poor's expects for Europe or the U.S. That is because Asia is unlikely to slip into a regional recession.
The report assesses the impact of a power shortage in Japan on companies there. It also analyzes the trends in the consumer electronic, automobiles, and retail sectors in Asia-Pacific.