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Australian Fixed-Income Investor Survey 4Q19

Investors Unsettled by Political Disagreements

Australian fixed-income investors consider political and geopolitical risk to be the greatest threat to domestic credit markets over the next 12 months. A record-high 74% of respondents consider this to be a high risk; in fact, all top-five risks are linked to politics or possible fallouts from political disagreements, such as a China hard landing or a housing-market downturn.

Global Telcos' 5G Capex Risk Contained; Leverage Stretched

5G capex risk for most telcos is likely to be contained over the next 18 months. However, the pressure to acquire wider spectrum bands to support future 5G rollout will reduce rating headroom.


Related Press Release:
Global Telcos' 5G Capex Risk Contained; Leverage Stretched

Japan Consumption Tax Rise Helps Medium-Term Fiscal Consolidation

Japan's consumption tax hike supports medium-term fiscal consolidation efforts, and the country's sovereign credit profile. It will lower Japan's debt ratio; however, very high public debt will remain a key credit weakness.


RelatedJapan Consumption Tax Rise Helps Medium-Term Fiscal Consolidation

2019 Milken Institute Asia Summit

China: Pathways to Prosperity in an Uncertain Era

Grace Wu, Head of Greater China Bank Ratings, joins other thought leaders at the 2019 Milken Institute Asia Summit in Singapore to discuss China and the potential risks and opportunities on the horizon against an uncertain geopolitical backdrop.

APAC Structured Finance Stable in 3Q19

Structured finance transactions in APAC continued their steady performance in 3Q19, with 94 transactions affirmed, seven upgraded, 20 assigned new ratings and one Rating Watch maintained.

Sri Lankan Bank Lending Rate Cap May Not Support Loan Growth

The lending rate cap recently imposed by the Central Bank of Sri Lanka (CBSL) on rupee-denominated loans extended by Sri Lankan banks may not improve loan growth in the short term. To the extent banks cannot price for risk in order to make hurdle rates of return, they may extend less credit for riskier consumer and commercial loans that carry higher losses.

Indian NBFCs Show Mixed Resilience to Testing Conditions

The more vulnerable NBFCs are likely to be wholesale and housing finance companies, which on average tend to operate with higher leverage and weaker asset-and-liability (ALM) maturity profiles, and face higher concentration risks. Tight liquidity and problems in parts of the property-development market are likely to keep these NBFC sub-sectors under pressure, at least in the near term.


Why did we downgrade Hong Kong?

Andrew Fennell discusses the key drivers behind our decision to downgrade Hong Kong to “AA” from “AA+”, with a “Negative” outlook at our Global Sovereign Conference in Hong Kong.


Overview on the Asia-Pacific Sovereign Ratings

Speaking from our recent Global Sovereign Conference, Stephen Schwartz provides an overview on APAC sovereign ratings, which are mostly stable except positive for Vietnam and Thailand, and negative for Hong Kong.

Weak Prices Hurt Asian Palm-Oil Producers' Earnings and Leverage

The nine palm-oil companies tracked by Fitch reported an average 26% rise in net debt/EBITDA in 2Q19, which resulted in a 92% yoy increase. We expect leverage at palm-oil producers to stay elevated throughout 2019, as prices are unlikely to recover significantly due to muted palm-oil demand and higher inventory from stronger 2H19 production.

Thailand's Economy, Banks Resilient to Rising Global Risks

Fitch Ratings (Thailand)'s annual global risk conference was attended by more than 300 executives and officials from the regulatory, investor, financial and corporate sectors. Dr Uttama Savanayana, Minister of Finance, was the guest of honour at the event and provided the keynote address.

China Corporates May Post Slowest Earnings Growth in Four Years

China's A-share listed corporates are likely to report the slowest growth for revenue and profit from operations since the last downturn in 2015-2016 this year amid an economic slowdown and the ongoing US-China trade dispute.

Chinese POEs Benefit from Bank Credit Easing, Cut Bond Funding

Chinese POEs' domestic bond maturities exceeded their new issuance by CNY62.7 billion in 8M19, with August 2019 the fourth straight month of negative net issuance. We think this was partly due to bond investors' continued weak sentiment for POE bonds, especially those rated below 'AAA' domestically, and the difficulty weaker POEs have in structured issuance in the aftermath of the Baoshang Bank takeover in late May.

Asia-Pacific Banks Face Rising Exposure to Property Risks

Banks in the Asia-Pacific region are increasingly exposed to property-related risks. Australia and New Zealand as most exposed to property stress, while Sri Lanka, Mongolia and Vietnam face elevated risk.


Related Press Release:
Asia-Pacific Banks Face Rising Exposure to Property Risks


Asia-Pacific Banks’ Rising Exposure to Property Risks

Available On-demand

Following our recent publication of the Asia-Pacific Banks: Rising Exposure to Property Risks report, Fitch ratings is pleased to invite you to a webinar to discuss the key themes in this report.

Listen Now

India Tax Cuts May Bolster Growth Eventually; Fiscal Impact Comes Sooner

The cuts, announced by Finance Minister Nirmala Sitharaman on 20 September, will lower the base corporate tax rate to 22% from 30% for companies that do not seek exemptions, and reduce the rate for some new manufacturing companies to 15% from 25%.

India's Big Tax Cuts Have Limited Impact on Corporates and Banks

India's 20 billion dollar tax cut is likely to have a limited impact on corporates' and banks' financial profiles but may revive capex and demand in some sectors. The Indian government introduced an option to pay a reduced corporate tax of 25.2% (including all surcharges and cess and excluding any exemptions) from 35% and a lower effective tax rate of 17% for newly set-up manufacturing companies after 1 Oct 2019. 

Singapore Banks' Emerging-Market Expansion Will Increase Risk

Singapore's three major banks' expansion into more volatile emerging markets will weaken their risk profiles, posing challenges to asset quality and increasing operational complexity. Deterioration in the operating environment or excessive risk-taking in these markets could increase the likelihood of negative rating action, unless compensated by enhanced loss-absorption buffers.


Japanese Non-Life Insurers' Financial Strength Likely Unaffected by Typhoon Faxai Losses

Nikkei news reported that the gross insured loss of Japan's top four non-life insurers could reach several hundred billion yen, although the insured loss is likely to be smaller than that caused by Typhoon Jebi in 2018.

India's New Property Fund Does Not Address Many Challenges

The government announced on 14th September a INR200 billion investment fund for stalled real-estate projects, following steps in the last few weeks to improve credit availability in the system, such as the partial credit guarantee scheme for public sector banks to purchase pooled assets of NBFCs/ HFCs.

Loan Repayment Buffer; Lower-Risk Lending Offsets Australian Household Debt Rise

Borrowers are able to prepay amounts into their mortgage loans by more than the scheduled payment, building up equity in the mortgage and reducing the principal amount outstanding. A redraw facility can be used to draw back excess payments, which are allowed at the lender's discretion.

China's Food Security is Ensured, but a Long-Term Challenge

China has been largely self-sufficient in major agricultural products, underpinned by strong domestic production, though ensuring long-term food security is not without challenges.

Related Press Release:
China's Food Security is Ensured, but a Long-Term Challenge

Asia-Pacific Banks Face Rising Exposure to Property Risks

Rising household debt increases risks for banks as borrowers' debt-servicing capacity becomes more sensitive to economic factors, and a high reliance on property to collateralise loans exposes banks in a property market downturn.

New Zealand Regional Banks' Well Positioned for a Downturn

Fitch's base case is for a stable operating environment, although downside risk from external events continues to increase. A downturn is likely to be felt through slower loan growth and a rise in impaired assets, particularly if unemployment increases significantly.

HKEX Bid for LSEG Signals Ongoing Consolidation

The proposed transaction follows LSEG's proposed acquisition of Refinitiv Parent Ltd. (Refinitiv, rated 'BB'/Rating Watch Positive). Both proposed transactions could come with near-term integration and deleveraging risks; if successful, this would result in highly diversified platforms over the longer term, better positioned to compete in an increasingly consolidated industry where scale and data are expected to drive outperformance.

Chinese Auto ABS Has Similar Net Losses to Global Markets and Lower Recoveries

China's auto ABS annualised net loss (ANL) index was low over the past year, similar to the US and Australia, although Europe's was marginally better.

Related Press Release:
Chinese Auto ABS Has Similar Net Losses to Global Markets and Lower Recoveries

Bloomberg TV

Why Did Fitch Downgrade Hong Kong for First Time Since 1995?

Andrew Fennell, director and lead analyst for Hong Kong and China at Fitch Ratings, explains why the agency has downgraded the city as an issuer of long-term, foreign currency debt for the first time since 1995.

Fitch Downgrades Hong Kong to 'AA' from 'AA+'; Outlook Negative

APAC Sovereigns Mostly Stable in the Face of Rising Growth Risk

The balance of risks for APAC sovereign credit profiles has shifted towards weaker global growth and away from global financial conditions. Nineteen of our 20 sovereign ratings in the region are on Stable or Positive Outlooks, reflecting the cushion provided by strong fiscal and external buffers and shock-absorbers from flexible policy frameworks.

Sufficient Buffers at Hong Kong Banks to Withstand Near-term Challenges

Fitch Ratings says its recent downgrade of Hong Kong's Long-term Foreign-Currency Issuer Default Rating to 'AA'/Negative' from 'AA+'/Stable does not have an immediate impact on its assessment of Hong Kong's banking system. 

Jinzhou Coupon Skip Underlines Varying Support for Chinese Banks

Our support-driven ratings of Chinese banks reflect our view that the state's propensity to provide extraordinary support to different tiers of banks will vary under a stress scenario.

China's Gas Demand Strong, Operators' Earnings to Rise in 2019

We expect their profit margins to narrow due to a bigger share of earnings from lower-margin gas sales, supported by coal-to-gas conversion, and moderating gas-connection margins, but their business profiles will improve as gas sales are more stable than connections.

Korea Has Fiscal Space, but Medium Term a Challenge

The 2020 budget announced on 29 August aims to respond to sluggish economic prospects stemming from the global growth slowdown, the US-China 'trade war', and trade tensions with Japan.

Singapore's New Digital Banks No Big Threat to Largest Banks

The Monetary Authority of Singapore (MAS) is accepting applications for new digital bank licences up until the end of 2019, and it will announce in mid-2020 up to two digital full bank licences that allow access to retail deposits and up to three digital wholesale bank licences catering to SMEs and other non-retail segments.

China Slowdown Would Hit Banks in Asian Developed Markets Most

Banks in Asia's trade-dependent developed markets would face the most pressure on their credit profiles in the event of a sharp slowdown in the Chinese economy.
RelatedChina Slowdown Would Hit Banks in Asian Developed Markets Most


Fitch Wins China Ratings Agency Award for Second Year Running

Fitch Ratings has been named the "Best International Ratings Agency" in FinanceAsia's China Awards for the second consecutive year.

China's National Pipeline Co Promotes Sector Liberalisation; NOCs' Credit Intact

The separation of transmission and product sales will allow private producers and customers to access the provincial and inter-provincial crude-oil and natural-gas pipeline network infrastructure that is largely monopolised by the NOCs.

Property Quality Continues to Underpin Australian REIT Results

Retail exposures remain challenged in the face of structural industry change, although larger properties in capital cities continue to fare better than those in regional locations, while office and industrial property valuations and high occupancy levels continue to benefit from limited supply and strong demand, particularly in Sydney and Melbourne.

Indonesia Auto Sales to Slow Amid Rate Cuts; AUTO's Credit Profile Remains Solid

Bank Indonesia's interest-rate cuts, which should drive consumer-lending rates lower, are unlikely to lead to a strong rebound in auto sales and four-wheeled vehicles sales will probably continue to slow in 2019.

Rating Headroom Drops for APAC Telcos on High Capex

The leverage headroom of Asia-Pacific telecom operators is narrowing, and is therefore likely to put near-term pressure on some of the ratings. We expect negative free cash flow to persist, as intensifying competition weakens the ability to fund rising capex and spectrum investments from cash generation by operations.

Revenue Diversity Key to Tencent's Resilience as China Slows

Tencent is relatively well positioned to deal with macroeconomic headwinds and competitive threats in China's internet sector due to its solid market leadership in multiple internet segments, large economies of scale and greater revenue diversity.

New Rules to Limit Chinese Corporates and LGFVs' Offshore Issuance

The Chinese regulator's recent changes in rules for offshore bond issuance by homebuilders and LGFVs are likely to keep Chinese corporate annual issuance flat in 2019, and will effectively cap it at this level in 2020.

RelatedNew Rules to Limit Chinese Corporates' Offshore Issuance

Higher Loss-Absorbing Capacity Rules to Slow Australia CVB Issuance

The Australian Prudential and Regulation Authority (APRA) in July 2019 announced its final rules on banks' total loss-absorbing capacity, which called on the four major banks to increase their capacity by 3pp of risk-weighted assets by January 2024.

NBFI Funding Squeeze to Hit Indian Property Developers Hardest

NBFIs are now also shying away from refinancing maturing debt of even large, proven developers to limit concentration risk to the sector. This is pushing developers towards alternative funding channels, such as private equity.

Structural Challenges Pressure Japanese Major Banks' Profitability

Evidence of banks increasing their risk appetite to improve profitability include higher exposure overseas and shifting into more complex structured notes from government bond holdings, although the extent varies among the banks.


Related Report:
Presentation: Japan's Major Banks

Chinese Steel Production to Drop After Rising to Record in 1H19

We expect steel production to decline in 2H19 due to three factors - a slowdown in housing construction, production restrictions led by environmental measures and market-driven production cuts on shrinking steelmaker margins.

Profitability Backs China Investment-Grade Homebuilder Ratings

Deteriorating market sentiment may lead to a moderate fall in home sales in 2019, driven mainly by falling volumes, especially in lower-tier cities where the sales of the past few years can no longer be sustained.

New U.S.-China Tariffs A Further Risk To Global Growth

U.S. President Donald Trump said on Thursday he would impose 10% tariffs on the remaining $300 billion of imports from China (the U.S. levied a 25% tariff on $200 billion out of around $540 billion of imports in May), beginning on September 1. The new tariffs broaden the goods being levied with additional tariffs and notably include consumer goods.

Additional Tariffs Raise Domestic Sales Risks on Indonesian Garment and Textile Sector

An Indonesia textile manufacturer focused on domestic sales - PT Delta Merlin Dunia Textiles (DMDT, CCC-) - said in July 2019 that it is facing financial difficulties due to increased competition from an influx of Chinese-made fabrics into the domestic market, among other reasons.


Fitch Wins Best Rating Agency for Emerging Market Bonds at Global Capital Awards

We are pleased to announce we have been voted the Best Rating Agency for Emerging Market Bonds at this year's Global Capital Awards. "Analytical excellence is a core focus at Fitch and this further recognition from global market participants underlines the quality of our emerging market analysis and commentary, as well as our broader market outreach efforts," Brett Hemsley, Global Analytical Head for Fitch Ratings.

Learn more about Fitch and Emerging Markets

Fitch Ratings Voted Best Agency for Chinese USD Bonds in 3 Categories

Fitch Ratings has been voted the "Outstanding Rating Agency for Chinese Companies' USD Bonds" in three categories by users of Wall Street Trader, a financial web application widely used by participants in China's debt capital markets. 


Fitch Ratings Named Best Islamic Finance Rating Agency for Third Year

Fitch Ratings has been recognised as the Best Rating Agency for Islamic Finance for the third straight year by The Asset, a leading financial magazine in the Asia-Pacific.

China Private Education Blue Book

Revenue growth in China's private education sector, which consists of private schools and private education service providers, is likely to moderate to high-single-digits, from the low-teens.


Other Blue Books

You may also access the links below for more In-depth industry and bond market analysis:


Sing Chan Ng


Sing Chan Ng

Business Inquiries

+65 6796 7210

Stephen Schwartz


Stephen Schwartz


+852 2263 9938

Buddhika Piyasena


Buddhika Piyasena


+65 6796 7223

Jonathan Cornish

Financial Institutions

Jonathan Cornish


+852 2263 9901

Terry Gao

International Public Finance

Terry Gao


+852 2263 9972

Sajal Kishore

Global Infrastructure Group

Sajal Kishore


+65 6796 7095

Jeff Liew


Jeff Liew


+852 2263 9939

Ben McCarthy

Structured Finance

Ben McCarthy


+61 2 8256 0388

Bashar Al Natoor

Islamic Finance

Bashar Al Natoor

Analytical Group Head

+971 4424 1242

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